County of San Diego: producing a successful popular annual financial report.

• Author: Pena, Gaby

In the hands of an investor, stakeholder, or rating agency, the comprehensive annual financial report (CAFR) is, for the most part, easily understood. But in the hands of a citizen with no financial background, governmental reporting expertise, or clear understanding of generally accepted accounting principles, it can be very intimidating. As a result, the Government Finance Officers Association (GFOA) encourages state and local governments to issue a popular annual financial report (PAFR) to supplement the CAFR by providing a less detailed overview of a governments financial activities. The PAFR can play an important role in making financial information accessible to ordinary citizens and other interested parties who may find traditional financial reports cumbersome. The purpose of the popular report is not to replace or to detract readers from the CAFR, but to act as a supplement.

THE FIRST PAFR: GETTING STARTED

When the County of San Diego issued its first PAFR in 2008, it had to determine what to put in the book, how to organize the data, and what design options to use. Team members put together a work plan that was made up of four stages, explained below.

1. Data Analysis. The team reviewed award-winning PAFRs to identify what data other entities considered important and how other entities presented their financial information. They focused on entities of similar size, structure, and services provided.

2. Data Matrix. The results of the data analysis exercise were captured in a matrix and further analyzed to determine what information was key, interesting, and valuable to PAFR readers. The final data the County of San Diego approved wasn't necessarily what other counties selected, but rather what made sense based on region, size, and customer base. Three key outcomes in this stage included introducing a five-business group structure, a business model (i.e., a strategic framework), and a special page dedicated to a fun or interesting fact.

3. Data Organization. This stage was meant to determine the order in which the data would be presented. The PAFR team decided to present data in balance-sheet order, emphasizing items with significant balances and highlighting the county's achievements throughout the document via the use of graphics representing each of the county's five business groups.

4. Data Design. Next, the team decided what software tool to use in preparing the PAFR, followed by the color palette, page layout, theme, and usage of photographs, charts, and diagrams. Some governments use Microsoft Word or Microsoft Publisher to produce their PAFRs. The County of San Diego chose to use its CAFR publishing tool, FrameMaker, for the first three years, after which it switched to Adobe InDesign, as staff with expertise using this product was now available. Using a professional design program improved the look of the report.

   SEVEN STEPS TO A SUCCESSFUL PAFR

   Work begins on the PAFR after the CAFR audit is completed. GFOA encourages PAFR Award Program participants to be creative in deciding which information to present in these reports, and how to present it. The following are hints designed to assist governmental entities with their PAFR preparation processes.

   Identify and/or Update the Annual PAFR Goals and Necessary Content. Identify the report's audience, and its needs and expectations. Decide what you want them to know and what they ought to know about their government, keeping in mind that most of the data come from, and lead to, the CAFR. Additional content might come from the budget report, charter, or property tax reports. Your goals and the content you choose to include in the...