Everyone Should Pay Attention to This GASB ProjectBy Warren Ruppel | July 30, 2021
For more than 40 years, governments have used the term “Comprehensive Annual Financial Report” to refer to financial reports that encompass the government’s financial statements that are presented along with certain introductory material, detailed fund information and statistical information.
This title was established in generally accepted accounting principles by the Governmental Accounting Standards Board (GASB’s) predecessor, the National Council on Governmental Accounting in 1979 and carried over by the GASB’s principles in its first accounting standards statement in 1984, shortly after the GASB’s inception.The history is important because it illustrates how names and acronyms change meaning over time, and the controversy that can result.
There is no issue with the title of this report. The issue is the acronym. When uttered aloud – as so many government acronyms are – it is pronounced the same way as an awful racial slur in South Africa that has become known worldwide.
The message should be clear. Everyone needs to stop using this acronym – NOW.
The GASB has heard the message and has issued an exposure draft of a proposed statement that would change the title of this report to the Annual Comprehensive Financial Report, with the acronym ACFR. The exposure draft was issued in April 2021.
Unfortunately, the word about this issue seems slow in getting out, and there are too many meetings and conversations where the old acronym is still being used. The GASB’s due process procedures likely won’t result in a new financial accounting standard before October 2021, so let’s try to spread the word on this issue now.
Until the GASB statement becomes finalized and effective, governments are faced with the challenge of determining how to refer to this report when they issue it. Two simple options are:
Don’t use the acronym – simply refer to the document as the Comprehensive Annual Financial Report.
Use a different phrase to define the Comprehensive Annual Financial Report instead of the acronym. The Government Finance Officers Association suggests the term “Annual Report” could be used.
Another option some have suggested is to use the new term from the GASB exposure draft – Annual Comprehensive Financial Report before it becomes finalized. Remember, it’s the acronym, not the full name, that is the problem. For the accounting purist, this approach would use a title that currently doesn’t exist in GAAP, which is problematic. It’s also conceivable that the GASB could change or tweak this name during its due process.
Fortunately, this issue will be addressed technically by the GASB in short order. The challenge will be to break the habit of using a term that has been in use for decades, but it is a challenge that must be met.
About Warren Ruppel
Warren Ruppel, CPA, is a Partner within the Nonprofit, Government & Healthcare Group at Marks Paneth LLP. He has over 40 years of experience in accounting and auditing services for governments and nonprofits. Prior to joining the firm, Mr. Ruppel served as the Assistant Comptroller for Accounting of The City of New York, where he was responsible for all aspects of the City’s accounting and financial reporting. He was also the Secretary of the City’s... READ MORE +