Preparation of an Annual Comprehensive Financial Report (ACFR) for submission to the GFOA for the Certificate of Achievement for Excellence in Financial Reporting (COA) Program requires additional information to be included in the financial report. The ACFR consists of three sections: Introductory, Financial and Statistical.
The Texas Education Agency (TEA) mandates an annual audit and the submission of the financial and compliance report within 150 days following the end of the fiscal year. However, it does not require this report to be an Annual Comprehensive Financial Report (ACFR).
The difference between an annual financial report (AFR) and an ACFR is that the AFR focuses on the basic financials, budget and cash flows. The minimum requirements for the AFR include:
- Board Certificate.
- Management’s Discussion and Analysis (MD&A).
- Independent auditors report.
- Basic financial statements, fund financial statements (governmental, proprietary and fiduciary if applicable) and notes to the financial statements.
- Budgetary Comparison Schedule for General Fund
- TEA required schedules.
- Federal Awards Section.
Preparation of an ACFR for submission to the GFOA for the Certificate of Achievement for Excellence in Financial Reporting (COA) Program requires additional information to be included in the financial report. The ACFR consists of three sections: Introductory, Financial and Statistical.
The Introductory section includes more detailed information about the entity including governance, management and leaders, strategic plan and overall outlook. The financial section includes the same basic financials included in the AFR. The financial section is then followed by the Statistical section which provides historical, demographic information, operating information and debt information.
The goal of preparing an ACFR is to provide more information and greater transparency for the readers, taxpayers and other users of the financial information. The addition of the Introductory section allows the readers to obtain a brief history of the entity, potential challenges faced by the entity and the strategic plan. The addition of the Statistical section provides readers a comparison of financial data going back ten years which allows you to see net position and fund balance trends, revenues and expense trends, etc. Revenue capacity by reporting historical data related to tax revenues and rates. Tables are included that show major taxpayers current and 9 years prior as well. Debt capacity will provide the readers historical information of debt balances, overlapping debt and debt service payments. The Demographic section provides readers information on employment in the area, median income, population, and major employers of the area. Lastly, the operating and capital asset trends will allow readers to see the number of employees in the District and the distribution of those employees, key operating indicators and capital asset information of the District.
Preparing an ACFR is an investment of time, but in doing so it can provide the users with not only additional information about the District and its outlook, but it also makes a statement about the District’s finance team in that gathering the information, maintaining the records and putting together a document that is recognized by the GFOA with the Certificate of Achievement for Excellence in Financial Reporting is an accomplishment.
If an ACFR has not been prepared previously but you are considering it, it’s never to early to start planning. Resources include:
- GFOA (https://www.gfoa.org/coa-award);
- Your County website, tax assessor collector and Central Appraisal District;
- Chamber of Commerce;
- Census websites
- County and City ACFRs in your District’s location;
- Your auditor can be a resource in helping to prepare and plan for preparation.
Plan at least a year in advance of the fiscal year you plan to prepare an ACFR if you have not prepared one previously. Speak to your contacts at the County, City, Chamber of Commerce, etc. to let them know the information you will need, when it becomes available, how to get access. If you write your report, start building the additional information into the report as soon as you know that you want to prepare an ACFR. Allow yourself additional time at year-end for preparation of the report, and even more for the first year. Make sure that you have the GFOA checklist (GFOA General Purpose Checklist) available in order to review your final report prior to submission. Communicate with your auditor that you plan to prepare an ACFR to allow for added time in reviewing, and added time for assistance.
Transparency becomes more relevant as time goes on. Readers want to be more informed, taxpayers want to know how their money is being spent and parents with students in the District want to have to have some comfort that the District is financially sound and able to provide the educational needs of their students.
