A Comprehensive Annual Financial Report (CAFR) is a required financial report of a state, municipality, or other governmental entities. CAFR’s are very similar to Annual Financial Reports, but the CAFR contains more detailed information. The CAFR contains financial information that complies with Generally Accepted Accounting Principles (GAAP) (Wilson, Reck & Kattelus, 2010).
The State of Illinois CAFR is prepared by the comptroller’s office and is audited by the American Institute of Certified Public Accountants (AICPA). As of 1978 the CAFR’s from local governments have become a requirement of the federal government.
There are three sections to the Illinois CAFR
- · The Introductory Section
- · The Financial Section
- · The Statistical Section
(Baar Topinka 2011).
The Introductory Section contains:
- · A table of contents
- · A letter of Transmittal from Judy Baar Topinka, the State Comptroller, where it is explained what the CAFR is and the legal requirements for the CAFR. It further goes on to explain that the comptroller’s office is responsible for the completion and accuracy of the data provided in the CAFR. The responsibility of the internal controls is discussed. The detailed results of the audit and any factors that had an impact on the financial situation of Illinois are also contained in the Letter of Transmittal.
- · Certificate of Achievement
- · An organizational chart of the Legislative, Executive, and Judicial Branch
(Baar Topinka 2011).
The Financial Section contains:
- · The independent auditors report.
- · The Management Discussion and Analysis (MD&A)
- · The Basic Financial Statements which include:
- o Governmental wide financial statements
- o Governmental funds financial statement
- o Proprietary Funds
- o Fiduciary Funds
- o Component Unit
- · Any additional notes to the Financial Statements
- · Additional Supplementary information not in the MD&A
- · The Combining Fund and Individual Fund Statements or Schedules. A description of each of these statements or schedules is included as well. The funds are: General, Non-Major Government, Debt Service, Capital Projects, Non-major Enterprise, Internal Service, Pension and Other Employee Benefit Investment Trust, Private Purpose Trust, Agency, and Component Units Funds.
- · The Budgetary Schedules for the State of Illinois are included in the financial section of the CAFR: The schedules for the following funds include: All Budgeted, General, Highway, Special State, Bond Financed, Debt Service, Federal Trust, Revolving, and State Trust.
(Baar Topinka 2011).
The Statistical Section of the CAFR became a requirement in 2004. The statistical section contains information and how it has changed over time. The items that need to be included in the statistical section are:
- · Financial Trends which show how the financial performance of the State of Illinois has changed.
- · Revenue Capacity that assesses the sources of revenue for the State of Illinois the personal income tax and sales tax.
- · Debt Capacity that shows the outstanding debt of the state as well as their ability to issue more debt in the future.
- · The Demographic and Economic Information section which provides information about the environment of the state.
- · Operating Information which shows how the financial report relates to the services the state of Illinois provides and the activities the state performs.
(Baar Topinka 2011).
I think that the entire CAFR is very informative and an easy report to understand. I feel that it gives the reader an overall condition of the financial health of the State of Illinois. I do feel that the financial section has the most interesting and the most detailed information. I like that there are graphs and charts to help illustrate the financial stability of the State of Illinois.
I find the Demographic and Economic Statistics from the last 10 calendar years to be the most useful statistical information. One thing I find particularly interesting is the big change in the unemployment rate from 2008 of 6.4% to 10.1% in 2009. I also saw that the Per Capita personal income for the state as well as the nation also decreased in 2009 from 2008 (Baar Topinka 2011).
The statistical information provided in the CAFR is very useful in determining trends and helps the reader understand the changes to the financials over a period of time. I feel that the statistical section could be helpful in forecasting for the State.
References:
Baar Topinka, J. (2011, June 30). Comprehensive Annual Financial Report. In www.ioc.state.il.us. Retrieved April 1, 2012, from http://www.ioc.state.il.us/?LinkServID=083E57BA-1CC1-DE6E-2F48783E3F984EF7&showmeta=0
Wilson, E. R., Reck, J. L., & Kattelus, S. C. (2012). Accounting for Government & Nonprofit Entities (15th ed.). New York, NY: McGraw-Hill/Irwin.