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Wednesday, September 19, 2012

CAFR - Do YOU know about it?


Mrs Warrior provided me with this document as "proof" that CAFR is not a hidden governmental account.. To me the document presented certainly seems to indicate otherwise!


Bold highlights are my own doing

From WikiPedia

[CAFR] History

The National Committee on Municipal Accounting (NCMA) was formed in 1934 by the Government Financial Officers Association[2] 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.[3]

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.

[edit]Differences between a general budget and a CAFR

The primary difference between a budget and a CAFR is that where the budget is a plan for the a fiscal period (often a 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 [budgets] 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 US companies are required by the U.S. Securities and Exchange Commission (SEC), to provide their Annual Financial Report (AFR) to every shareholder each year. Some publicly funded non-profits (or Not-for-profit) quasi-government private associations have claimed that they are not subject to the public records laws and that their reports are not subject to open records acts.(Ky.Atty.Gen cashe link below)

[edit]Media Coverage & Misconceptions

News stories covering financial issues of government cite "rainy day funds" or special "ear marked" funds, loans between government entities, sales of government holdings in, for example, shares of a health care insurance company and the "budget" is often referred to, along with mentions of pension funds investments, but the full accounting of assets of government entities, the "CAFR" is typically not mentioned. "Alternative" media, since the late 1990s, has exposed segments of the public to the subject of the (U.S.) CAFR contributing to the topic being labeled as "conspiracy theory" or "soap box" issue. Reporting on government financial issues can be seen as sensationalized in dealing with alleged excesses in spending. A $10,000 dollar Christmas tree for example, or vague mentions of "many billions" in referring to issues around the pension funds managed by a state. In one recent series of reports, the Kentucky Association of Counties whose spending came under scrutiny by the Lexington Herald-Leader provided some awareness of these types of entities as well as their surpluses and the claimed spending excesses while using money acquired from government fees for products like municipal insurance at premium rates, which build surpluses beyond the needs of the entity. [4] Typical topics of the alternative media may include examples of: government entities financing each others bond issues; Orange County California's or other divisions of government investments in derivatives; financial deals that are kept from the public to entice businesses to locate in a state, which may include tax incentives in exchange for stock assets in a company. Much of both the mainstream and alternative media coverage of the topic of government financial issues must be considered a factor in public's confidence towards issues of government Accountability.

*I* heard that if you add together ALL the CAFRs you discover that fully 52% of equity markets are owned by government entities.. Greg

Check out this link for more information YOU should know about..


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