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BEST PRACTICE

Governmental Accounting, Auditing, and Financial Reporting Practices (1983, 1997, and 2006) (CAAFR)

Background. Since its inception early in the last century, the Government Finance Officers Association (GFOA) has been committed to the transparency and reliability of public-sector financial reports. As a result, GFOA has long been at the forefront of efforts to promote the highest standards of accounting, auditing, and financial reporting as represented by generally accepted accounting principles (GAAP), generally accepted auditing standards (GAAS), and Government Auditing Standards (GAS). GFOA also believes that state and local governments should not be satisfied with issuing only the basic financial statements required by GAAP, but
should instead publish a comprehensive annual financial report (CAFR).

 

Recommendation. GFOA urges every state and local government to do all of the following to fulfill its financial
reporting responsibilities:

  • Maintain an accounting system adequate to provide all of the data needed to allow for the timely preparation of financial statements for the entire financial reporting entity in conformity with GAAP;
  • Issue timely financial statements for the entire financial reporting entity in conformity with GAAP as part of a CAFR; and
  • Have those financial statements independently audited in accordance with either GAAS or GAS, as appropriate.

 

Furthermore, GFOA recommends that state governments enact legislation requiring local governments to maintain an accounting system adequate to provide all of the data needed to prepare timely financial statements in conformity with GAAP and to have those financial statements independently audited in accordance with GAAS or GAGAS.

 

References
• GFOA’s Certificate of Achievement for Excellence in Financial Reporting Program

 

Approved by the GFOA’s Executive Board, February 24, 2006.