Fundamentals of Governmental Accounting and Reporting

Chapter 11Financial Reporting and the Comprehensive Annual Financial Report

Learning objectives

• Recall the minimum requirements for general-purpose external financial statements.
• Identify what must be included in management’s discussion and analysis (MD&A).
• Identify what must be included in required supplementary information (RSI).
• Identify what must be included in a comprehensive annual financial report (CAFR).

Refer to appendix C for an example of MD&A and a statistical section.

Contents of a CAFR

Governments must include certain minimum financial statements, reports, and other information in their external financial reports. Governments are encouraged, however, to go beyond the minimum requirements and to issue a CAFR. What information must be included in the different reports and where does it go? This chapter will try to answer those questions.

The minimum requirements for general-purpose external financial statements

The key objective of financial reporting for governments is accountability. To meet this objective, certain minimum requirements have been established for external financial reports; these requirements are designed to meet the basic needs of a broad group of external users. A government’s general-purpose external financial statements must contain, at minimum, the following items:

• MD&A
• Basic financial statements
  • Government-wide financial statements
  • Fund financial statements
  • Notes to the financial statements
• RSI (other than MD&A)

The relationship among ...