A comprehensive annual financial report is a financial statement released by public sector entities or government agencies. This financial report contains information relating to capital receipts, expenditures, assets, and other financial information relating to the organization. While a comprehensive annual financial report is similar in function to a private company’s financial statements, it presents information differently, since most government agencies use fund accounting. Fund accounting sets up various accounts for the different uses of funds collected by public sector organizations or government agencies.
Comprehensive annual financial reports usually include three government financial statements. A statement of activities, a balance sheet, and a cash flow statement are usually the most popular government financial statements. Because public organizations and government agencies use fund accounting, a statement of activity may be created for each fund. These individual statements are then used to create an aggregate statement of activity to present a top level review of the organization’s or agency’s financial activity. The information on the statement of activity is similar to the private sector company’s income statement; information is usually limited to capital receipts and expenditures for each fund.
The comprehensive annual financial report may also include a balance sheet for the public sector organization a government agency. This government financial statement includes the assets owned by the organization or entity and the liabilities owed to outside companies or agencies. The balance sheet is usually prepared as an aggregate report for all funds reported by the public sector organization or government agency.
The statement of cash flows tracks all funds generated from tax receipts, public or private investments, interest from bank accounts and other various sources of income. This statement also lists the cash outflows for a specific time period. The comprehensive annual financial report includes this information so individuals can understand how well the public sector organization or government agency used its collected or generated cash.
Public sector organizations and government agencies may often include high various bits of management information or other assessments, along with government financial statements in the comprehensive annual financial report. These statements may include explanations as to significant challenges and organizational policies that provide information as to why revenues increased or decreased more than expected. This information also helps individuals understand how all revenues were collected, why expenditures were made, and how the organization or agency plans to spend excess capital or cover shortfalls listed in the financial report. Watchdog groups may also use the comprehensive annual financial report to determine how responsible public sector organizations or government agencies are when collecting and spending money collected from citizens.