A comprehensive annual financial report serves a number of purposes for the general public, investors and other interested groups. One of the most significant purposes of a comprehensive financial report is that it provides a valuable insight into how city or state officials manage public finances.
Full Financial Disclosure
A comprehensive annual financial report (CAFR) is an instrument of financial disclosure. Similar to an annual report for a business, a CAFR lends insight into the financial health of a city or state.
The General Accounting Standards Board
Financial accounting and reporting is overseen by an independent body called the General Accounting Standards Board (GASB). The purpose of the GASB is to provide city and state governments with generally accepted accounting practices (GAAP) and enforce uniformity among accounting practices.
The comprehensive annual financial report shows citizens what city or state governments do with public money. With the accounting practices being uniform and made public, voters can gauge if public officials are trustworthy.
Financial transparency is important for cities and states to preserve both public and investor trust. When a city or state issues bonds to finance projects, investors are likely to evaluate creditworthiness based on reports like the CAFR.
A comprehensive annual financial report helps hold elected officials accountable to their constituency. Responsible financial management gives voters insight into how well public officials managed their public duties.