Definition and Elements of Financial Reporting
Lessons in
chapter I
of
Financial Reporting in Government
By
Dr. John Sacco
,
George Mason University
Revised
Saturday, October 11, 1997
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Financial reporting in government can be seen
as a summary of the government's performance,
or capacity, in raising, handling, and using
public money. Governments issue many types of financial
reports, but the most encompassing and visible is the
Comprehensive Annual Financial Report (
CAFR ).
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State and Local governments issue an annual financial
report called the Comprehensive Annual Financial Report
(CAFR, pronounced cay-fer ). The CAFR has these
parts: an introductory section, a financial section,
and a statistical section. Some but not all of what
goes into the CAFR is shaped by the Governmental
Accounting Standards Board (GASB), which is the current
authoritative source for governmental Generally Accepted
Accounting Principles (GAAP).
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The official definition for a financial report is given
by the Governmental Accounting Standards Board (GASB).
GASB and its predecessors developed standards that
contribute to generally accepted accounting principles
(GAAP). GAAP are used to prepare financial reports,
although many other rules, laws and guidelines are also
used.
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A financial statement is a specific kind of financial
report. Financial statements measure the financial
success, financial conditions (also called health or
position), and compliance of the entities and funds in
the government. In other words, these statements help
assess the government's performance in raising,
handling, and using money. Financial statements are of
considerable interest in this course. The financial
statements are in the financial section of the CAFR .
Often they are released separately or as part of other
reports.
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Historically, rules for accounting and financial
reporting were developed as new pressures arose. An
alternative to reacting to pressures as they arise is to
produce a conceptual framework and to derive the
accounting rules or standards from this framework so
that standards have one common reference point. With
one common reference point, one standard should not
conflict with another. Such a goal is attractive in
theory but often falls short in practice. GASB, since
its origin, has been building a conceptual framework,
but the standards derived are still a function of
current pressures as well as the conceptual framework.
See Also: the
introduction
, a
pretest
, a
discussion
, the
study aides
, a
test
, and your
progress evaluation