Discussing the CAFR Award Sections with the Most Frequently Cited Deficiencies: The note disclosures are most frequently called out, receiving approximately 48 percent of all comments from CAFR Award reviewers.

Author:Levine, Michele Mark
Position:The Accounting Angle

One advantage GFOA has over other organizations that provide training and publications about financial reporting for US. state and local governments is the association's Certificate of Achievement for Excellence in Financial Reporting program. As a result of the CAFR Award program, GFOA staff (as well as the members of the Special Review Committee who volunteer to perform peer reviews) see literally thousands of state and local government comprehensive annual financial reports (CAFRs) a year, giving us a level of exposure and insight that is second to none. When GFOA staff are asked to address state associations and other organizations, one of the most frequently requested topics is common reporting deficiencies and how to avoid them--so we know that others recognize the value of insights gleaned from the program. In this article, we'll take a big-picture look at the kinds of issues we most frequently see in reviews, and then delve into detail about pension and other postemployment employment benefit (OPEB) disclosures required in the note disclosures section--an area where a number of deficiencies are being found--to help readers avoid these pitfalls.


Exhibit 1 is a graphically weighted representation of the CAFR sections that have the most commonly cited departures from the program's criteria (selected generally accepted accounting principle, or GAAP, requirements as well as GFOA's recommendations) that reviewers have commented on for fiscal 2017 CAFRs to date. The note disclosures are most frequently called out, receiving approximately 48 percent of all comments. The presentation of the basic financial statements and the information in the statistical section of the CAFR are also frequently cited as needing improvement, but neither is a close second to note disclosures in terms of opportunities for improvement.

Exhibit 2 breaks down the deficiencies within note disclosures by topic. The most frequent comments are on disclosures regarding pension benefits. Pensions are a complex topic--arguably one of the most complex in GAAP --and they are governed by relatively recent standards that governments are still adjusting to. This subject becomes all the more timely because many of the same issues are likely to arise with the in 2018 required implementation of GASB's new OPEB benefit reporting standards, which are very similar to the pension reporting standards.


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