BAR, Business Analysis and Reporting
Sources for The Financial Section of the ACFR
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The standards and authorities behind PocketCPA's BAR lessons on The Financial Section of the ACFR. The topic rests on GASB Statement No. 34, GASB Statement No. 44, GASB Statement No. 54, GASB Statement No. 63, GASB Statement No. 65, GASB Statement No. 98, GASB Statement No. 103, and GASB Codification Section 2200.
About this topic
A government publishes one report a year, and the first thing a reader has to settle is which parts of it anybody checked. The annual comprehensive financial report, or ACFR, is not a single set of statements. It runs in three sections and carries four different levels of assurance. The level attaching to any page is decided by which authority required that page rather than by where it sits or how important it looks.
A reader arriving from for-profit reporting has one further thing to hold in place. A business publishes one set of statements on one basis of accounting, and an auditor opines on them as a whole. A government publishes two layers over the same activities, the government-wide statements on the economic resources measurement focus and the full accrual basis, and the fund financial statements reporting governmental funds on the modified accrual basis. Both layers are basic financial statements and both sit inside the same opinion. Around those two layers sits narrative that no auditor tested, fund detail that received more audit work than the narrative did, and a ten-year statistical section nobody touched at all. Sorting the report into those categories is the subject.
Key points
- The ACFR includes the management's discussion and analysis (MD&A), the basic financial statements, and required supplementary information.
- Government-wide statements report all governmental and business-type activities on the full accrual basis.
- Fund financial statements report individual major funds and a column for other funds in the aggregate.
- The statistical section covers ten years of trend data and is unaudited.
What the lessons cover
- Where the financial section sits
- MD and A and the basic financial statements
- Government-wide versus fund statements
- Notes and required supplementary information
- The independent auditor's report and the four levels of assurance
- Combining and individual fund statements as other supplementary information
- The introductory and statistical sections
- What GASB 103 changed in the financial section
- Placing one government's facts in the ACFR
Authoritative references
- GASB Statement No. 34, paragraphs 6 and 7 and 8 through 11, the basic financial statements and their required components, with footnotes 6 and 7.
- GASB Statement No. 34, paragraphs 75 through 77, the major fund criteria and the summary reconciliation of the fund statements to the government-wide statements, with footnotes 35, 36 and 37.
- GASB Statement No. 34, paragraph 126 and paragraphs 129 through 133, required supplementary information, including Management's Discussion and Analysis, with the related footnotes.
- GASB Statement No. 34, Codification instructions, carrying NCGA Statement 1 Principle 12 on annual financial reports.
- GASB Statement No. 44, Economic Condition Reporting: The Statistical Section, whose five categories and ten-year presentation organize the statistical section; the section answers to this Statement and not to GASB Statement No. 34.
- GASB Statement No. 63, the components of net position: net investment in capital assets, restricted, and unrestricted.
- GASB Statement No. 65, the unavailable revenue deferral and deferred inflows of resources.
- GASB Statement No. 98, issued in October 2021, which renamed the comprehensive annual financial report the annual comprehensive financial report.
- GASB Statement No. 103, Financial Reporting Model Improvements, issued in April 2024 and effective for fiscal years beginning after June 15, 2025, paragraphs 1 through 19, including the five sections Management's Discussion and Analysis may contain, with the supersession and amendment list in paragraph 3 and the transition under GASB Statement No. 100 as a change in accounting principle.
- GASB Codification Section 2200, the comprehensive annual financial report.
- AICPA Audit and Accounting Guide, State and Local Governments, paragraph 16.103 and Appendix A Example A-1, the five opinion units and the reporting language for required supplementary information, supplementary information, and other information.
The fund types, modified accrual recognition, fund balance classifications, and the sign-by-sign arithmetic of the two reconciliations are taught in full in FAR's State and Local Government Accounting lesson and are cross-referenced rather than restated here.
How PocketCPA uses these sources
Every lesson is written in original words and cites the paragraph each rule comes from. No standard's text is reproduced. How lessons and questions are written and checked is set out in our methodology.