Recently the acronym for the commonly used Comprehensive Annual Financial Report (CAFR) has come under fire due to what it represents when said amongst some groups in South Africa and other parts of the world. To avoid misunderstandings, you will soon start seeing Annual Comprehensive Financial Report (ACFR) instead.
You may be wondering what that looks like and means for your government. The good news is there is no change to the actual requirements and structure to your annual financial statements, just a change to what we previously referred to as the CAFR now known as the ACFR.
In December 2020, the Government Accounting Standards Board (GASB) issued an exposure draft proposing the changes to the name of the annual financial report. The proposal notes that the existing anonym CAFR, when spoken, sounds like a profoundly offensive racial slur directed towards Black South Africans. According to the article dated April 13, 2021, GASB Chair Joel Black is quoted as saying, “When you pronounce the acronym, it is a highly offensive racial slur directed toward Black South Africans. As we and our stakeholders are part of a global community, we do not wish to be offensive to anyone, so we have undertaken the project to address this.”
The term Comprehensive Annual Financial Report was established by the National Council on Governmental Accounting (NCGA) Statement 1, Governmental Accounting and Financial Reporting Principals in GAAP in 1979 and carried over in force in 1984 by GASB Statement No. 1, Authoritative Status of NCGA Pronouncements and AICPA Industry Audit Guide. Replacing the acronym would have no impact on the preparing, auditing or using the GAAP- based financial statements. However, as the acronym is ingrained in numerous publications and used throughout the standards, this will not be an over-night change, but rather adopted as new publications are created.
The tentative effective date is slated for fiscal years ending after December 15, 2021 with early application suggested. The exposure draft was approved by the GASB Board in April 2021. The comment period has since begun and the deadline for those is July 9, 2021. If you would like more information regarding the change, visit GASB.org.
This may be the last year we refer to our financial statements as a CAFR. If you have any questions or concerns, please contact your Henry+Horne advisor.