ACFR – Annual Comprehensive Financial Report

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A CAFR/ACFR is a government’s most complete annual financial report. It combines audited
financial statements, management explanation, fund-level detail, debt and pension disclosures,
and long-term statistical trends. It is one of the best documents for understanding a public
entity’s true financial condition.

Renamed in 2020 from CAFR (Comprehensive Annual Financial Report) reportedly due to CAFR sounding too similar to a South African slur/slang against negroes.

Official Montgomery County, Maryland ACFR/CAFR PDFs since FY2020:

Official index page:
https://www.montgomerycountymd.gov/department-finance/annual-financial-reports-disclaimer/annual
-financial-reports

It is a detailed annual financial report usually prepared by a state, city, county, school
district, public authority, or other government entity. In recent government accounting usage,
CAFR has mostly been renamed ACFR: Annual Comprehensive Financial Report because the old acronym
sounded like an offensive term, but the report concept is the same.

What a CAFR / ACFR is

A CAFR is the government-sector equivalent of a full annual financial statement package. It
shows:

  • what money came in
  • what money went out
  • what assets the government owns
  • what debts and liabilities it has
  • whether funds were used according to law/budget
  • long-term financial condition
  • pension and benefit obligations
  • infrastructure and capital asset information

It is generally prepared under GAAP for governments, using standards from the Governmental
Accounting Standards Board, or GASB.

Common things to look for

If reviewing a CAFR, check:

  1. Auditor’s opinion
  2. General Fund balance
  3. Unrestricted net position
  4. Pension and OPEB liabilities
  5. Long-term debt
  6. Revenue vs expense trends
  7. Interfund transfers
  8. Budget-to-actual results
  9. Notes on lawsuits or risks
  10. Whether reserves are growing or shrinking

Fund accounting

Governments separate money into funds because different money has different legal purposes.

Examples:

  • General Fund
  • Capital Projects Fund
  • Debt Service Fund
  • Enterprise Fund, like water/sewer
  • Pension Trust Fund

Net position

Similar to equity/net worth, but for governments.

Formula:

Assets + Deferred Outflows – Liabilities – Deferred Inflows = Net Position

Categories may include:

  • net investment in capital assets
  • restricted net position
  • unrestricted net position

Fund balance

For governmental funds, “fund balance” shows available resources.

Categories:

  • nonspendable
  • restricted
  • committed
  • assigned
  • unassigned

The unassigned General Fund balance is often watched closely because it indicates financial flexibility.

3. Statistical Section

This section gives long-term trend data, often 10 years.

It may include:

  • revenue trends
  • expense trends
  • tax base data
  • debt capacity
  • demographic data
  • economic indicators
  • staffing levels
  • operating statistics
  • capital asset statistics

This section helps readers understand whether the government’s finances are improving or
weakening over time.

Why CAFRs matter

A CAFR is important because it gives a much fuller picture than a simple budget report.

A budget may show annual spending authority, but a CAFR shows:

  • actual financial position
  • long-term debt
  • pension liabilities
  • restricted vs unrestricted money
  • cash and investments
  • fund balances
  • whether current revenues cover current costs
  • fiscal sustainability

A CAFR/ACFR is commonly prepared by larger or more formal public entities, especially:

  • states
  • counties
  • cities
  • school districts
  • transit authorities
  • water/sewer authorities
  • public universities
  • pension systems
  • other special districts

But whether one is required depends on:

  • state law
  • local law
  • bond/debt covenants
  • grant requirements
  • audit requirements
  • entity size
  • whether it follows full GAAP reporting
  • whether it seeks GFOA recognition

Small towns, tiny districts, or limited-purpose bodies may instead file:

  • basic audited financial statements
  • annual financial reports
  • budget reports
  • state-required reports
  • single audits, if federal funding thresholds apply

So: most significant U.S. government entities publish audited annual financial statements, but
not every one publishes a full ACFR.

There is no single official count of all U.S. agencies that issue a CAFR/ACFR.

Reason: ACFRs are issued by many kinds of governments and public entities, and requirements vary
by state/local law. There is not one national filing registry for every ACFR.

Useful scale:

  • The U.S. has about 90,000+ local governments if you include counties, cities/towns, townships,
    school districts, and special districts.
  • Add 50 states, D.C., territories, public universities, pension systems, transit agencies,
    authorities, etc.
  • But not all of those issue a full ACFR.

A realistic rough answer:

│ Thousands of U.S. public entities issue ACFRs, probably many thousands, but not all 90,000+
│ governments.

A narrower proxy: the GFOA Certificate of Achievement for Excellence in Financial Reporting
program recognizes many ACFRs each year, but that only counts entities that voluntarily submit
for the award, not every ACFR issuer.

So the safest answer is:

There are likely several thousand to tens of thousands of CAFR/ACFR-reporting public entities in
the U.S., but no definitive nationwide total.

Montgomery County ACFRs show deficit-type figures, specifically negative unrestricted net
position.

Confirmed from the ACFR data I could extract:

┌──────┬────────────────────┬───────────────────────────┐
│ FY │ Total net position │ Unrestricted net position │
├──────┼────────────────────┼───────────────────────────┤
│ 2025 │ +$3.749B │ -$889.0M │
├──────┼────────────────────┼───────────────────────────┤
│ 2024 │ +$3.539B │ -$861.3M │
├──────┼────────────────────┼───────────────────────────┤
│ 2023 │ +$2.875B │ -$1.122B │
├──────┼────────────────────┼───────────────────────────┤
│ 2022 │ +$2.232B │ -$1.631B │
├──────┼────────────────────┼───────────────────────────┤
│ 2021 │ +$1.368B │ -$2.461B │
└──────┴────────────────────┴───────────────────────────┘

So:

  • No, they do not show “everything is just positive.”
  • Yes, they show a repeated negative unrestricted net position, which is a deficit-style number.
  • But also yes, the County still shows positive total net position overall.

Important nuance: Montgomery County’s ACFR notes that some of the negative unrestricted position
is affected by county-issued debt for schools/other entities’ capital assets. So it’s not
automatically “bankrupt” or “not fine,” but it is absolutely a real deficit-type indicator.

I could not cleanly extract FY2020 text with the tools here, so I’m not going to claim the
FY2020 exact figure without checking the PDF manually.

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