Comprehensive Annual Financial Report (CAFR/ACFR)

How It Works

Renamed to Annual Comprehensive Financial Report (ACFR) in 2021 by GASB Statement 98 to move away from the "CAFR" acronym (which had acquired negative connotations in South African slang), this document is the most complete and authoritative picture of a city's financial position. The ACFR includes three main sections: (1) introductory (letter of transmittal, organization chart, list of officials), (2) financial (independent auditor's report, management's discussion and analysis, government-wide and fund financial statements, notes to the financial statements, required supplementary information), and (3) statistical (10-year trend data on revenues, expenditures, debt, demographics, and operating indicators). The financial section comprises the government-wide Statement of Net Position and Statement of Activities (using full accrual accounting under GASB 34), fund-level statements (using modified accrual for governmental funds), proprietary fund statements, fiduciary fund statements including pension trusts, and roughly 20-40 notes covering accounting policies, cash and investments, receivables, capital assets, long-term debt, pension and OPEB obligations, leases, commitments, and subsequent events. The GFOA awards a Certificate of Achievement for Excellence in Financial Reporting to cities that produce ACFRs meeting rigorous standards, approximately 4,000 governments earn this designation annually. Municipal bond analysts at Moody's, S&P, and Fitch rely heavily on ACFRs, as do institutional investors, academic researchers, and watchdog organizations including Truth in Accounting and Pew Charitable Trusts. ACFRs are posted to the MSRB's EMMA system under continuing disclosure requirements of SEC Rule 15c2-12 for most issuers. Stale or late ACFRs (filed more than 9-12 months after fiscal year-end) are flagged by rating agencies as a governance weakness and factor into the management-quality overlay of the CitySpend Fiscal Health Score.

Related Terms

• Generally Accepted Accounting Principles (GAAP), The standardized accounting rules that governments follow when preparing financial statements, as promulgated by the Governmental Accounting Standards Board (GASB).
• Governmental Accounting Standards Board (GASB), The independent organization that sets accounting and financial reporting standards for U.S. state and local governments.
• Single Audit, A comprehensive annual audit required for governments that spend $750,000 or more in federal funds, ensuring compliance with federal grant requirements.