Finance FAQ

CAFR stands for Comprehensive Annual Financial Report . A CAFR is a set of financial statements for a state, municipality or other governmental entity that comply with the accounting requirements established by the Governmental Accounting Standards Board (GASB). It must be audited by an independent auditor using generally accepted government auditing standards.

The CAFR consists of three sections: Introductory, Financial and Statistical.

The Introductory section orients and guides the reader through the report. The Financial section presents the entity’s basic financial statements as well as notes to the statements and the independent auditors’ report. The Statistical section provides additional financial and statistical data, including data about financial trends that may better inform the reader about the government’s activities.

A regular annual report typically presents only basic financial statements about the government. A CAFR, by contrast, presents a wider variety of important information intended to help the reader properly understand the basic statements. 

A budget is a plan for a future fiscal period, typically a year, primarily showing how tax revenue will be allocated; a CAFR contains the actual results of the prior year’s financial activities.

A CAFR presents a wide variety of important information. Depending on the reader’s specific focus, various sections might be of interest.

Generally speaking, a reader can find the “high points” by reading through the Management Discussion and Analysis (MD&A) in the financial section. The MD&A describes the previous year’s results and key factors influencing them; shows the entity’s current financial condition; and provides an overview of likely future prospects.