Comprehensive annual financial report
Encyclopedia
A Comprehensive Annual Financial Report (CAFR) is a set of government financial statements
comprising the financial report of a state, municipal or other governmental entity that complies with the accounting requirements—generally accepted accounting principles (GAAP)—promulgated by the Financial Accounting Standards Board
(FASB).
A CAFR is "compiled" by a state, municipal or other governmental accounting staff and "audited" by an external American Institute of Certified Public Accountants
(AICPA) certified accounting firm utilizing FASB requirements. It is composed of three sections: Introductory, Financial and Statistical. It combines the financial information of fund accounting
and Enterprise Authorities
accounting.
to create accounting standards. As a result of its work, the 'Principles of Municipal Accounting', the predecessor to the CAFR, was created. The successor to the NCMA, the National Council on Governmental Accounting (NCGA), issued 'Governmental Accounting, Auditing and Financial Reporting', which is the basis of the format for the current standard. This document, known as the "Blue Book", and its successors documented the CAFR accounting structure and provided standardization and example documents. By 1946, the various levels of government
--federal, state, local and municipal—each began producing a CAFR to catalog an accurate picture of institutional funds, enterprise or financial holdings, assets and total investment incomes
for those government and nongovernmental entities using the report. This measure is above and beyond the budget process and replaced what was regularly an "off-the-books" practice called the "general fixed-asset
account group". General Purpose government "budget" reports did not reflect accounting of this financial data, only reporting on the budget or "rainy day" funds or pension fund investments. By the 1970s, the CAFR became the nationwide paradigm for local government accounting.
The resulting CAFR is presented to the GFOA, which conducts each year a review of applicant local government CAFRs and upon review awards their Certificate of Achievement Award for Excellence in Financial Reporting to those local governments that are in compliance with their CAFR accounting standards of preparation. Presently, accounting principles for government entities are set by transmittal letters issued to local governments by the GASB.
A Government budget document is a blueprint for a "specific grouping" of government agencies' spending over the course of an annual financial period. General Purpose Budgets contain both the spending categories of specified units of government, such as school districts, social services, transportation, police, fire, and park services; along with estimates of revenues expected to occur during the year, such as investment return; overrides of money from the previous year, and tax payments. They are usually more limited to the expected costs of running the aforementioned government operations
through tax income as opposed to describing the status of any government fixed assets and investment wealth.
A CAFR is a report of the complete overall financial results of both those "specific groupings" of government agencies that appear in the current fiscal year General Purpose Budget and all other agencies and departments. These can be autonomous, enterprise(for example government or city owned golf courses), recycling, water, sewer, and financial management - often these agencies were created with the inception of that local, state or government. The CAFR provides information about all of these other government agencies that may have their own budgets and separate investment accounts but their financial holdings are not combined with the general purpose budget that the same government presents to the public. The CAFR, or as it is called in CANADA CanFR can be used along with a budget document to compare the organizations total financial standing to the annual general purpose budget. The CAFR is the complete showing of the financial investment and income records from all sources, that reflects what has developed over decades whereas a budget report is an inferior document to the CAFR being that it is primarily focused on what revenue is expected to be brought in and spent for just the year.
In contrast with the rules applying to governments, publicly traded companies such as IBM or Microsoft who are required by the U.S. Securities and Exchange Commission, SEC, to send what is called their Annual Financial Report (AFR) to every shareholder each year. Publicly funded non-profits(or Not-for-profit) quasi-government private associations have claimed that they are not subject to the public records laws & their reports are not subject to open records acts like the Kentucky Association of Cities ( KACO for Counties). However, news stories covering the Kentucky Association of Counties whose spending came under scrutiny by the Lexington Herald-Leader
exposed these types of entities as well as their surpluses and claimed spending excesses using money acquired from government fees for products like municipal insurance at premium rates which build surpluses beyond the needs of the entity.
While some have called these the "2nd set of books", Burien refers to the CAFR as "the book" with the budget being a section contained therein. Their assessments of government assets, holdings and investment supporting globalism
, ownership by government investment "for profit" and government's international investments profits, significantly enhanced with the use of the now 600 trillion dollar international derivatives
markets with government investments strategically placed for profit from free trade
, war, commodity market, stock market
, International investment movement and extreme price volatility is created by these massive moves by "institutional government funds" speculators scattered around the globe manipulating the market either deliberately or by volume.
Since 1998, with the CAFR being brought to the attention of the public by the efforts of Walter Burien and Gerald Klatt, the Government Accounting Standards Board (GASB), starting making significant reporting standards changes using transmittal letters. Burien and Klatt claimed that such changes were calculated steps to hide from the general public's view massive domestic and international wealth, investment assets and authority "enterprise funds", all of which could be seen more visibly outlined in the combined financial columns of 1999 and previous CAFRs, which required a showing of gross totals. The modifications transitioned the accounting from a primary showing of gross totals to that of net totals. Burien and Klatt claim that because these changes are being made without inclusion in the formal standard, there has been virtually no media attention on these issues.
While a budget may indicate that a specific government or agency has financial trouble and debt as a result of excess spending within the select grouping of "general fund" accounts, the CAFR may indicate that overall the same government entity has many facets possessing large holdings and income considerably greater than what is shown in a budget report or the "general fund" alone.
Government financial statements
Government financial statements are annual financial statements or reports for the year. The financial statements, in contrast to budget, present the revenue collected and amounts spent. The government financial statements usually include a statement of activities , a balance sheet and often some...
comprising the financial report of a state, municipal or other governmental entity that complies with the accounting requirements—generally accepted accounting principles (GAAP)—promulgated by the Financial Accounting Standards Board
Financial Accounting Standards Board
The Financial Accounting Standards Board is a private, not-for-profit organization whose primary purpose is to develop generally accepted accounting principles within the United States in the public's interest...
(FASB).
A CAFR is "compiled" by a state, municipal or other governmental accounting staff and "audited" by an external American Institute of Certified Public Accountants
American Institute of Certified Public Accountants
Founded in 1887, the American Institute of Certified Public Accountants is the national professional organization of Certified Public Accountants in the United States, with more than 370,000 CPA members in 128 countries in business and industry, public practice, government, education, student...
(AICPA) certified accounting firm utilizing FASB requirements. It is composed of three sections: Introductory, Financial and Statistical. It combines the financial information of fund accounting
Fund Accounting
Fund accounting is an accounting system emphasizing accountability rather than profitability, used by non-profit organizations and governments...
and Enterprise Authorities
Government-sponsored enterprise
A government-sponsored enterprise is a financial services corporation created by the United States Congress. Their function is to enhance the flow of credit to targeted sectors of the economy and to make those segments of the capital market more efficient and transparent...
accounting.
History
The National Committee on Municipal Accounting (NCMA) was formed in 1934 by the Government Financial Officers AssociationGovernment Financial Officers Association
The Government Finance Officers Association is a professional association of approximately 17,500 state, provincial, and local government finance officers in the United States and Canada....
to create accounting standards. As a result of its work, the 'Principles of Municipal Accounting', the predecessor to the CAFR, was created. The successor to the NCMA, the National Council on Governmental Accounting (NCGA), issued 'Governmental Accounting, Auditing and Financial Reporting', which is the basis of the format for the current standard. This document, known as the "Blue Book", and its successors documented the CAFR accounting structure and provided standardization and example documents. By 1946, the various levels of government
Political divisions of the United States
The political units and divisions of the United States include:*The 50 states are subdivided into counties . The counties may be further subdivided into townships, or towns in New York and New England...
--federal, state, local and municipal—each began producing a CAFR to catalog an accurate picture of institutional funds, enterprise or financial holdings, assets and total investment incomes
Fixed income
Fixed income refers to any type of investment that is not equity, which obligates the borrower/issuer to make payments on a fixed schedule, even if the number of the payments may be variable....
for those government and nongovernmental entities using the report. This measure is above and beyond the budget process and replaced what was regularly an "off-the-books" practice called the "general fixed-asset
Fixed asset
Fixed assets, also known as a non-current asset or as property, plant, and equipment , is a term used in accounting for assets and property which cannot easily be converted into cash. This can be compared with current assets such as cash or bank accounts, which are described as liquid assets...
account group". General Purpose government "budget" reports did not reflect accounting of this financial data, only reporting on the budget or "rainy day" funds or pension fund investments. By the 1970s, the CAFR became the nationwide paradigm for local government accounting.
The resulting CAFR is presented to the GFOA, which conducts each year a review of applicant local government CAFRs and upon review awards their Certificate of Achievement Award for Excellence in Financial Reporting to those local governments that are in compliance with their CAFR accounting standards of preparation. Presently, accounting principles for government entities are set by transmittal letters issued to local governments by the GASB.
Differences between General Budgets and CAFR
The primary difference between a budget and a CAFR is that where the budget is a plan for the a fiscal period (often year) primarily showing where tax income is to be allocated, the CAFR contains the results of the period (year) with previous years accumulations. A CAFR shows the total of all financial accounting that a general purpose budget reports does not. The CAFR contains a section that provides a comparison of period budget and actual. Additionally, the CAFR gives a detailed showing of investment accounts by category reflecting balances over previous years.A Government budget document is a blueprint for a "specific grouping" of government agencies' spending over the course of an annual financial period. General Purpose Budgets contain both the spending categories of specified units of government, such as school districts, social services, transportation, police, fire, and park services; along with estimates of revenues expected to occur during the year, such as investment return; overrides of money from the previous year, and tax payments. They are usually more limited to the expected costs of running the aforementioned government operations
Government operations
This article aims to describe the financial expenditure associated with the operations and processes of world governments of all levels.-Size of economic footprint:...
through tax income as opposed to describing the status of any government fixed assets and investment wealth.
A CAFR is a report of the complete overall financial results of both those "specific groupings" of government agencies that appear in the current fiscal year General Purpose Budget and all other agencies and departments. These can be autonomous, enterprise(for example government or city owned golf courses), recycling, water, sewer, and financial management - often these agencies were created with the inception of that local, state or government. The CAFR provides information about all of these other government agencies that may have their own budgets and separate investment accounts but their financial holdings are not combined with the general purpose budget that the same government presents to the public. The CAFR, or as it is called in CANADA CanFR can be used along with a budget document to compare the organizations total financial standing to the annual general purpose budget. The CAFR is the complete showing of the financial investment and income records from all sources, that reflects what has developed over decades whereas a budget report is an inferior document to the CAFR being that it is primarily focused on what revenue is expected to be brought in and spent for just the year.
In contrast with the rules applying to governments, publicly traded companies such as IBM or Microsoft who are required by the U.S. Securities and Exchange Commission, SEC, to send what is called their Annual Financial Report (AFR) to every shareholder each year. Publicly funded non-profits(or Not-for-profit) quasi-government private associations have claimed that they are not subject to the public records laws & their reports are not subject to open records acts like the Kentucky Association of Cities ( KACO for Counties). However, news stories covering the Kentucky Association of Counties whose spending came under scrutiny by the Lexington Herald-Leader
Lexington Herald-Leader
The Lexington Herald-Leader is a newspaper owned by The McClatchy Company and based in the U.S. city of Lexington, Kentucky. According to the 1999 Editor & Publisher International Yearbook, the Herald-Leaders paid circulation is the second largest in the Commonwealth of Kentucky...
exposed these types of entities as well as their surpluses and claimed spending excesses using money acquired from government fees for products like municipal insurance at premium rates which build surpluses beyond the needs of the entity.
Recent Developments
From at least 1998, a former Commodities Trading Adviser (CTA) who had been a active CTA for about fourteen years, Walter Bubien AKA Burien, and a federal auditor of thirty years, Gerald Klatt, have claimed upon showings seen and from referencing within the now 184,000 local government CAFRs, AFRs and other Federal audit reports, including Audit of the IRS, US Treasury Audit of Bank derivative holdings (tables 1, 2, 3 on pages 22, 23, 24 show that the top three banks were trading and holding over 150 trillion dollars worth of derivatives, apparently in primarily government accounts, US Treasury Audit of Bank Mortgage holdings, Federal Consolidated Financial Statements, CAFR for the Federal Reserve and List of State CAFRs.While some have called these the "2nd set of books", Burien refers to the CAFR as "the book" with the budget being a section contained therein. Their assessments of government assets, holdings and investment supporting globalism
Globalism
Globalism can have at least two different and opposing meanings. One meaning is the attitude or policy of placing the interests of the entire world above those of individual nations...
, ownership by government investment "for profit" and government's international investments profits, significantly enhanced with the use of the now 600 trillion dollar international derivatives
Derivative (finance)
A derivative instrument is a contract between two parties that specifies conditions—in particular, dates and the resulting values of the underlying variables—under which payments, or payoffs, are to be made between the parties.Under U.S...
markets with government investments strategically placed for profit from free trade
Free trade
Under a free trade policy, prices emerge from supply and demand, and are the sole determinant of resource allocation. 'Free' trade differs from other forms of trade policy where the allocation of goods and services among trading countries are determined by price strategies that may differ from...
, war, commodity market, stock market
Stock market
A stock market or equity market is a public entity for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.The size of the world stock market was estimated at about $36.6 trillion...
, International investment movement and extreme price volatility is created by these massive moves by "institutional government funds" speculators scattered around the globe manipulating the market either deliberately or by volume.
Since 1998, with the CAFR being brought to the attention of the public by the efforts of Walter Burien and Gerald Klatt, the Government Accounting Standards Board (GASB), starting making significant reporting standards changes using transmittal letters. Burien and Klatt claimed that such changes were calculated steps to hide from the general public's view massive domestic and international wealth, investment assets and authority "enterprise funds", all of which could be seen more visibly outlined in the combined financial columns of 1999 and previous CAFRs, which required a showing of gross totals. The modifications transitioned the accounting from a primary showing of gross totals to that of net totals. Burien and Klatt claim that because these changes are being made without inclusion in the formal standard, there has been virtually no media attention on these issues.
While a budget may indicate that a specific government or agency has financial trouble and debt as a result of excess spending within the select grouping of "general fund" accounts, the CAFR may indicate that overall the same government entity has many facets possessing large holdings and income considerably greater than what is shown in a budget report or the "general fund" alone.
- In 1994, Orange County California government lost about $1.5 Billion on investments in the derivativeDerivativeIn calculus, a branch of mathematics, the derivative is a measure of how a function changes as its input changes. Loosely speaking, a derivative can be thought of as how much one quantity is changing in response to changes in some other quantity; for example, the derivative of the position of a...
s market and claimed they needed to declare bankruptcy per their general purpose budget while holding approximately 11.3 billion in profitable holdings in their investment portfolios. - The University of KentuckyUniversity of KentuckyThe University of Kentucky, also known as UK, is a public co-educational university and is one of the state's two land-grant universities, located in Lexington, Kentucky...
's holdings of 85% of CHA Health insurance stock was documented in 2005 in the Lexington Herald Leader newspaper when CHA was sold to a rival firm as part of the UK president's effort to raise a billion dollars to fund becoming a "top 20" research university an ongoing effort. - In 2010, Oregon Rep. Bruce Hanna during general session when the floor was discussing what to do about the state's 3.5 billion dollar budget shortfall (fire employees, cut back on services, close state parks), stood up with the cover page from the state CAFR in hand and stated that in less than a few minutes he found $3.5B to satisfy the state shortfall, there being no shortfall when comparing the state CAFR and the previous "selective" presentation of the State general purpose operating budget.
See also
- GFOA
- California Society of Municipal Finance Officers (CSMFO)California Society of Municipal Finance OfficersThe California Society of Municipal Finance Officers is a professional association of state, county, and local government finance officers in California. The California Society of Municipal Finance Officers is the statewide organization serving all California municipal finance professionals, an...
- GASBGASBGASB may refer to:* Governmental Accounting Standards Board * Gallium antimonide...
- Single AuditSingle AuditIn the United States, the Single Audit, also known as the OMB A-133 audit, is a rigorous, organization-wide audit or examination of an entity that expends $500,000 or more of Federal assistance received for its operations...
- NationalizationNationalizationNationalisation, also spelled nationalization, is the process of taking an industry or assets into government ownership by a national government or state. Nationalization usually refers to private assets, but may also mean assets owned by lower levels of government, such as municipalities, being...
- Government Accountability OfficeGovernment Accountability OfficeThe Government Accountability Office is the audit, evaluation, and investigative arm of the United States Congress. It is located in the legislative branch of the United States government.-History:...
- Financial statementsFinancial statementsA financial statement is a formal record of the financial activities of a business, person, or other entity. In British English—including United Kingdom company law—a financial statement is often referred to as an account, although the term financial statement is also used, particularly by...
- Working Group on Financial MarketsWorking Group on Financial MarketsThe Working Group on Financial Markets was created by Executive Order 12631, signed on March 18, 1988 by United States President Ronald Reagan.The Group was established explicitly in response to events in the financial markets surrounding October 19,...
- RevenueRevenueIn business, revenue is income that a company receives from its normal business activities, usually from the sale of goods and services to customers. In many countries, such as the United Kingdom, revenue is referred to as turnover....
- Government-owned corporationGovernment-owned corporationA government-owned corporation, state-owned company, state-owned entity, state enterprise, publicly owned corporation, government business enterprise, or parastatal is a legal entity created by a government to undertake commercial activities on behalf of an owner government...
- Budget theoryBudget theoryBudget theory is the academic study of political and social motivations behind government and civil society budgeting. Classic theorists in Public Budgeting include Henry Adams, William F. Willoughby, V. O. Key, Jr., and, more recently, Aaron Wildavsky. Notable recent theorists include Baumgartner...
- Comprehensive incomeComprehensive incomeComprehensive income is a specific term used in companies' financial reporting from the company-whole point of view. Because that use excludes the effects of changing ownership interest, an economic measure of comprehensive income is necessary for financial analysis from the shareholders' point...
- Permanent fundPermanent fundIn the United States, a permanent fund is one of the five fund types established by GAAP classified as a government fund. Put simply a permanent fund may be used to generate and disperse money to those entitled to receive payments by qualification or agreement, as in the case of Alaska citizens or...
- Public companyPublic companyThis is not the same as a Government-owned corporation.A public company or publicly traded company is a limited liability company that offers its securities for sale to the general public, typically through a stock exchange, or through market makers operating in over the counter markets...
- Derivative (finance)Derivative (finance)A derivative instrument is a contract between two parties that specifies conditions—in particular, dates and the resulting values of the underlying variables—under which payments, or payoffs, are to be made between the parties.Under U.S...
- Regulatory captureRegulatory captureIn economics, regulatory capture occurs when a state regulatory agency created to act in the public interest instead advances the commercial or special interests that dominate the industry or sector it is charged with regulating. Regulatory capture is a form of government failure, as it can act as...
- US national security privatizationUS national security privatizationIn October 2004, a conference was held at Middlebury College, entitled "The Privatization of National Security." Sponsored in part by the Woodrow Wilson School of Public and International Affairs at Princeton University, the conference discussed the privatization of functions historically...
- Government Accountability Office investigations of the Department of DefenseGovernment Accountability Office investigations of the Department of DefenseGovernment Accountability Office investigations of the Department of Defense are typically audits in which the Government Accountability Office , the United States Congress’ investigative arm, studies how the Department of Defense spends taxpayer dollars...
External links
- Governmental Accounting Standards Board (GASB) Web Site
- American Institute of Certified Public Accountants (AICPA) Web Site
- "The Biggest Game In Town" - Walter Burien's January 2000 documentary
- "The Only Game in Town" - Walter Burien's January 2010 documentary 10 min trailer
- 65 years of the Blue Book - a detailed history of how the CAFR standards were developed by GFOA.
- Treasury Direct FedInvest site
- GAO History Government Accounting Office