Government financial reports

Government financial reports are an important part of democracy ( or a constitutionally limited republic) but often not widely read or discussed. Online reporting by governments makes these government financial reports more accessible but not necessarily more understood by the general citizenry.

Governmental financial reports can include not only the budget or "general fund" as often referred to, but also several other types of government financial reports, financial statements, performance reports, Comprehensive Annual Financial Reports(CAFR), and audits. Many governmental financial reports are online and opened to critical review by knowledgeable constituents, taxpayer groups, bond rating firms and creditors. Online sources for state (and local financial reports, down to local entities like the water board, school board and government corporations including Comprehensive Annual Financial Reports or CAFRs) can be found using internet search engines or through professional organizations like Governmental Accounting Standards Board (GASB), as one example. Ratio analysisis one of the ways to examine the financial conditions of a government from a revenue potential for generating bond ratings, for instance. This gives a comparative or relative status of a government to sell bond debt to fund projects without raising funds through increasing current taxes that can adversely affect an economy and a political career.

One of The Key Elements in the financial statement is the Management Discussion and Analysis (MD&A). The MD&A is designed to provide a readable version of the technical financial statements. In June of 1999, the Governmental Accounting Standards Board adopted standard 34. Standard 34 requested all cities and states in the US to include a MD&A in their financial statement or CAFR.

CAFR vs. Budget

The CAFR shows more comprehensive accounting entries that budget reports do not, and also should not be confused with "rainy day funds" or required pension surplus holdings that are GeneRally included in many government budgetary reports, process and media reports.

A budget is for a select grouping ( sometimes referred to as "general fund") of accounts showing only the more commonly known revenue income from taxes, fees, licenses, fines and a select few revenue sources. The common government budget report also includes, expenses such as salaries, payments towards operating costs, and entitlements will be shown along with minimum required holdings to fund pensions, insurance and bonds.

The CAFR shows not only selectively presented budget items, but also government "enterprise operations" or "enterprise funds", investments, and the return on them (or loss). These funds include but are not limited to assets and holdings to back pension and retirement obligation reserves as required by law.

Comprehensive Annual Financial Report

A "Comprehensive Annual Financial Report" or "CAFR" is a government book keeping practice which started in the post WWII economic boom and replaced what was regularly an "off-the-books" practice called the "general fixed asset account group" . The various levels of government; "general government" or the federal United States, individual state governments and government agencies each began producing a CAFR in the late 1940s to early 1950s to catalog an accurate picture of institutional funds, or financial holdings, assets and total investment incomes for those government and non-governmental entities using the report, which is above and beyond the budget process. In 1945, the Government Corporation Control Act, began the auditing of wholly owned government corporations and mixed ownership corporations,( those that government may have controlling holdings in but operate as private corporations) all of which may come under the term "enterprise funds".

While a budget might indicate that the government or agency has financial trouble and debt, (because of excess spending within the select grouping of "general fund" accounts presented), the CAFR will normally indicate that government possesses large holdings considerably over what is shown in a budget report or "general fund" alone. Examples from recent history include, Jesse Ventura's career, punctuated by his returning some of the government surpluses to voters as governor of Minnesota. Other rare news events have highlighted the off-the-budget holdings and "enterprise funds" of government. In one widely reported example in the late 1990s (Los Angeles) Orange County California lost $1-Billion on investments in the derivatives market.

See also

  • Single Audit
  • Government Accountability Office,
  • Working Group on Financial Markets
  • Revenue (bottom line vs. "top line")
  • Government-owned corporation
  • Budget theory
  • Comprehensive income
  • Permanent fund
  • Public company
  • Crony capitalism
  • Government Accountability Office investigations of the Department Of Defense
  • Financial statements
  • Federal Accountability Act(Canada)

de:Government Accountability Office

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