The scope of financial reports presented in conformity with generally accepted accounting principles (GAAP) is broad and data in those reports are usually presented at a high level of detail. Such comprehensive and detailed presentations are needed to meet the needs of decision-makers and to demonstrate compliance with legal requirements to oversight bodies and others. Annual financial reports issued in conformity with GAAP are essential if governments are to meet their obligation to be accountable to their citizens. Unfortunately, the comprehensiveness and level of detail found in many GAAP reports may confuse or discourage those unfamiliar with accounting and financial reporting.
GFOA has long been on record as encouraging every state and local government to issue a comprehensive annual financial report (CAFR) in conformity with GAAP. GFOA also encourages governments to supplement their CAFR with simpler, "popular" reports designed to assist those who need or desire a less detailed overview of a government's financial activities. Such reporting can take the form of consolidated or aggregated presentations, or a variety of other formats. GFOA recommends that popular reports exhibit the following characteristics to be most effective:
- The data in the popular report should be extracted from the CAFR;
- The popular report should be issued on a timely basis, no later than six months after the close of the fiscal year, so that the information it contains is still relevant;
- The scope of the popular report should be clearly indicated (i.e., does the popular report include component units as well as the primarily government?);
- The popular report should mention the existence of the CAFR for the benefit of readers desiring more detailed information;
- The popular report should attract and hold readers interest, convey financial information in an easily understood manner, present information in an attractive and easy-to-follow format and be written in a concise and clear style;
- The popular report should avoid technical jargon to meet the needs of a broad, general audience and the report's message should be underscored, as appropriate, by photographs, charts, or other graphics;
- The narrative should be used, as appropriate, to highlight and explain items of particular importance;
- Comparative data should be used constructively to help identify trends useful in the interpretation of financial data;
- Popular reports should be posted on the governments web site. Hardcopies, when issued, should be distributed in a number and manner appropriate to their intended readership (e.g., newspaper or magazine inserts, sample copies provided to libraries, sample copies provided to professional offices);1
- Popular report preparers should strive for creativity;
- Users of popular reports should be encouraged to provide feedback; and
- Most important, the popular report should establish its credibility with its intended readers by presenting information in a balanced and objective manner.
GFOAs Award for Excellence in Popular Annual Financial Reporting Program