Comprehensive Annual Financial Report Breifing

Topics: Financial statements, Income statement, Generally Accepted Accounting Principles Pages: 3 (860 words) Published: January 9, 2012
It is very important to comprehend how government accounting works in comparison to for profit accounting. Government accounting’s foundation is fund accounting, where the government has different funds, which are mostly mandated by federal and state laws, in order to trace the flow of capital used on a day to day basis (Copley, P. A. 2011). Every fund generally has a required budget that it must work within the limits of. This capital is then detailed on comprehensive annual financial report also known as the CAFR which describes the whole government entity. One of the major differences between government and for-profit accounting is how the accumulate revenue and expenses (Copley, P. A. 2011). With for-profit accounting they make a profit from the sale of products and services. For-profit accounting utilizes what is called the matching concept when it comes to documenting and computing profitability. The use of this type of concept identifies capital when it is made and spent when it happens. The use of fund accounting, as a government entity calculates the flow of present profitability. Income is the inflow and expenses are the outflows of the government’s present state of economic resources. This type of accounting is known as the modified-accrual basis of accounting (Copley, P. A. 2011). The CAFR is the official annual report of the city of Chicago which is a government agency. Taking a look at the management discussion and analysis also known as the MD&A we will explore all the different things that could be found in the CAFR and how they are generally reported.

Looking at the MD&A city of Chicago has government funds that come from different types of income and business activities that are the result of services provided to the community. Revenue that the city of Chicago reports fall into two categories one being programs revenue and the other general. Under the program category they have, Licenses, Permits, Fines and charges for services,...
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