Cafr

Comprehensive Annual Financial Report Briefing

Comprehensive Annual Financial Report Briefing

Governmental accounting and reporting is different from for profit accounting and reporting in many ways. The Governmental Accounting Standards Board (GASB) sets the accounting and reporting standards for state and local governments whereas the Financial Accounting Standards Board (FASB) sets the standards for the for profit businesses (Granof & Wardlow, 2011). Governments use either the modified accrual basis of accounting and reporting or the full accrual basis, depending on the type of funds used or established. Governments have an approved budget they must stay within while providing services that cannot necessarily be measured by a dollar amount to see if they are successful (Copley, 2011). For profit businesses also use budgets to determine their expenses for projects or the year, but they are able to go over budget without dropping programs or raising property taxes for example.

The government’s financial statements provide users with a picture of their inflows and outflows (Granof & Wardlow, 2011). Users cannot necessarily look at the numbers in the statements and determine if the city is being successful (Granof & Wardlow, 2011). The statistics for the programs and services they provide are not included in this report and play a huge role in determining if the government is spending the money wisely (Granof & Wardlow, 2011). For profit businesses use the full accrual basis of accounting and recording and operate to earn a profit and to generate revenue to survive and be able to grow. For profit businesses usually have one ledger, the general journal, but governments have a general journal that is broken down into specific funds or subaccounts that each have their own journals (Copley, 2011).

The GASB requires governments to prepare two different types of financial statements, government-wide statements and governmental funds statements and are...