Guide to Understanding Annual Comprehensive Financial Reports (ACFRs)

ACFR stands for Annual Comprehensive Financial Report . An ACFR 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 ACFR 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.

How is it different from a regular financial report or budget?

A regular annual report typically presents only basic financial statements about the government. An ACFR, 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 ACFR contains the actual results of the prior year's financial activities.

Do all governmental organizations file ACFRs?

No . Most state and local governments are required by law to issue basic financial statements, and some, including Texas, are legally required to issue a ACFR as well. Many governments not required to issue an ACFR do so anyway because it represents a best practice in government finance.

Who sets the rules for ACFRs? Do they change often?

GASB sets the standards governing the content of an ACFR. GASB is an arm of the Financial Accounting Foundation, which also administers the Financial Accounting Standards Board that establishes accounting standards for private companies.

When developing proposals for new standards, GASB solicits feedback from the governmental accounting community through a variety of avenues, including public hearings, public forums, task forces and focus groups. The primary feedback mechanism, however, is a request for written comments from GASB, which anyone can submit.

Where can I find ACFRs?

There is no single, central location for all government ACFRs. Typically, ACFRs are posted on a government's website under "Publications" or "Reports," along with other financial documents such as budgets and performance reports.

ACFRs typically are stored as a PDF available for download. The Texas Comptroller's office provides links to annual reports and ACFRs for certain participating Texas local governments through our Transparency Stars program .

From the taxpayer's viewpoint, what are the most important numbers in an ACFR? How can a lay reader quickly find the most useful items concerning financial health?

An ACFR 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.

Where would I look to find the organization's outstanding debt?

Long-term debt information can be found in all three general sections (Introductory, Financial and Statistical). The best way to locate debt information is to start with the table of contents and look for the following: