Analysis of the CAFR and CCR Reports

Analysisof the CAFR and CCR Reports

Analysisof the CAFR and CCR Reports

Publicentities are required to prepare comprehensive annual financialreport in order to inform the stakeholders about their financialcondition. The Citizen Centric Report is an initiative that isintended to enhance communication between the government andcitizens. The CAFR entity considered in this paper is Calvert Countygovernment. Calvert is one of the counties located in the state ofMaryland and it was formed in 1694. The county is led by acommissioner type of government. A team of five commissioners iselected to serve for a given period (Calvert County Government,2015). The 2010 census indicated that the county had a totalpopulation of about 88,737 people (Calvert County, 2016). It occupiesthe Calvert Peninsular that is bordered by the Patuxent River on thewest and the Chesapeake Bay on the East.

Thefocus of each report

TheCAFR report of Calvert County focused on presentation financialstatement as required by the law. The Code of Public Local Lawrequires the incumbent government to prepare an annual report of thecounty’s financial activities and position in a given fiscal period(Calvert County Government, 2015). Therefore, the annual reporthelped the government to accomplish three purposes, including meetingthe regulatory requirement, stating the financial performance as wellas the financial position, and promoting the development agenda of anincumbent government. Although the annual report has numerouscomponents, four of them (including the management’s discussion,basic financial statements, non-major funds, and compliance report)helped the government achieve its goals. These components of theannual report indicate the financial aspects of the reporting agency.The government also used the annual report to explain its five-yearstrategic plan.

Themain focus of the CCR issued by the government of Polk County was tohelp the stakeholders understand the 2015 budget. The intention ofpreparing the report was to inform the readers about the keyservices, the goals that the government intends to accomplish throughthe budget, the main sources of revenue, and the desired future ofthe county (Polk County Government, 2015). The report wascomprehensive enough to show the taxpayers how the governmentintended to collect revenue from them and the activities that wouldbe financed using the funds. Therefore, the report served theinterest of the county government, which was to help the readers ofthe CCR keep the tract the sources and appropriation of the publicrevenue.

Whatthe CAFR and CCR reports try to impart on the users

Theadministration of the Calvert County prepared the CAFR in order toimpart the sense that it has the responsibility of protecting thepublic resources from loss, misuse, and theft. In addition, thegovernment used the report to inform the users about the level ofcompliance of the financial statements with the Generally AcceptedAccounting Principles (GAAP). This information is critical because itcould help the government convince the users of the report that thefinancial statements represent a true and fair view of the financialposition of the county. By imparting the knowledge about the level ofcompliance, the readers of the report could then rely on theinformation presented in the report to make critical decisions. Thegovernment also used the report to impart the knowledge of differentfunds under which appropriations were segregated, with the objectiveof helping the users keep track of how the public resources werespent in the financial year 2015. The users could also learn aboutthe key factors that affect the financial condition of the county(including the local economy and the long-term financial planning)from the CAFR.

TheCCR is trying to impart its readers with the information that thecounty government collects revenues in order to meet the specificneeds of the citizens. The processes of making the budget andprojecting the amount of revenue that the government should collectin a given fiscal period is informed by the current needs of theresidents (Polk County Government, 2015). The CCR also seeks toimpart its readers with the information that the budget for the year2015 is one of the tools that will help the government achieve itslong-term plan and enhance the quality of life of the citizens in thefuture. From the report, the government includes the quality of lifeas one of the key goals that will be pursued by safeguarding thepublic as well as the environmental health.

Reviewof the main sections of CAFR

Independentauditor’s report

Thereport of an independent auditor is among the most criticalcomponents of a CAFR because it indicates the financial position of apublic entity from an objective point of view. In the case of CalvertCounty, the report prepared by an independent auditor indicates thatthe county received an unqualified report due to its high level ofcompliance with the Generally Accepted Accounting Principles. Fromthe auditor’s report, the financial statements prepared by thecounty government presented the true and the fair view of thefinancial status of the agency (Calvert County Government, 2015).Although the independent audit firm exempted its liability fordisclosure and presentation of several items (including the scheduleof contributions, Volunteer Fire and Rescue Pension Fund, andSheriff’s Department Pension plan), there were no materialmisstatements reported.

Management’sdiscussion and analysis

Thecounty government utilized this section to inform the readers of theCAFR about what they should expect and how to combine the informationpresented in the section with the content of other parts (includingthe notes to financial statements) of the report. The purpose ofreading the management’s discussion in conjunction with othersections is to allow the readers have a comprehensive understandingof the annual report. The government opened the discussion bycreating an impression that the county is liquid enough to meet allits obligations. For example, the first highlight in the management’sdiscussion section states that a combination of deferred outflows andassets owned by the county government exceeded all liabilities anddeferred inflows by $ 153.9 in the financial year 2014/2015 (CalvertCounty Government, 2015). In addition, the amount of $ 18.8 that thecounty reserved for its current and future needs is an indication ofeffective planning. The administration of Calvert County used thediscussion section to explain the factors (such as governmentactivities) that resulted in a decrease in the total net position.


Thegovernment-wide financial statements were used to accomplish twomajor purposes. First, the government used the statements tocommunicate about its net financial position as at the end of thefinancial year 2014/2015. This was indicated in the Statement of NetPosition, which showed the difference between the county’s assetsand its liabilities (Calvert County Government, 2015). Secondly, thegovernment used the Statement of Activities to show the concernedstakeholders how the financial position of the county changed duringthe financial period. The clarity with which the government-widestatements were presented made it easy for the users of the annualreport to distinguish between functions that were supported byintergovernmental taxes and operations that were financed using thetaxes. Organizations use internal controls as tools to safeguardtheir assets and ensure that the information presented in the annualreport is accurate, complete, and reliable (Mihaela &amp Lulian,2012). The government of Calvert County used various funds ascontrols to regulate different resources that were segregated forspecific objectives and activities. These funds allowed the countygovernment to demonstrate its compliance with the GAAPs.

Notesto financial statement

Notesto the financial statements provide critical information about themethodologies used by the reporting agency to record and reportdifferent transactions, stock option compensations, and pension planamong other items (IFRS Foundation, 2013). The use of about 13 notesto the statements of accounts increase the clarity of the annualreport issued by the government of Calvert County for the financialyear 2015. The county government also used the notes to explain thepurpose of each of the funds that were used to report on differentitems. The Trust Fund, which is one of the key Fiduciary Funds, wasused to account for different pension plans and post-employmentbenefits (Calvert County Government, 2015). This information made iteasy for readers of the annual report to analyze the actual financialstatements. Additionally, the notes were used to explain thefunctions as well as the responsibilities of different parties thatwere involved in the process of collecting and disbursing publicfunds. The Director of Finance and Budget was responsible fortransfer of different appropriations, but within the limits set inbudget. Therefore, the county government used the budget as a tool tofacilitate revenue generation and control appropriations.

Publicaccountant`s report on compliance and internal controls

Areport issued by the public accountant to provide the readers of theannual report with information regarding the level of compliance iscritical because independent auditors do not give an opinion on thismatter. The stakeholders rely on the information provided by thepublic accountant to assess the level of compliance as well as thestrengths of internal controls used by the government agency tosafeguard the assets of the organization (Mihaela &amp Lulian,2012). However, the report on internal controls that have beenapplied by Calvert County government could not satisfy the needs ofthe readers. This was confirmed by the fact that the accountantstated that there could be some material weaknesses that may not havebeen identified.

Reviewof the main sections of CRR for the Polk County

Polkis a county that is located in the northwestern region of Wisconsin.The county government used the CCR to inform the readers about therange of services that it offers and give an overview of the budgetfor the year 2015. By providing a list of services that the countyoffers (including child support and protection, nutrition for theelderly, and transport), the reporting entity was able to justify theneed for collecting from taxpayers and spending public funds. A largenumber of services targeted the vulnerable citizens, including theelderly and children, which indicates the government’s sensitivityto the needy members of the society.


Thecounty government spends the public funds by setting goals that itwishes to accomplish over a given period. Setting financial goals andkey indicators of success makes the process of performance evaluationeasier and effective. Most importantly, the goals set for thefinancial year 2015 were intended to enhance the quality of life ofresidents and create a suitable environment for business. The countysought to accomplish these goals by investing more funds ineducation, agriculture, transport, environment, and economicdevelopment projects. However, it is evident that county governmentrelied more on general property taxes to finance its operations,which is confirmed by the fact that property tax contributed about $20,170,122 to a budget of $ 60,160,476 (Polk County Government,2015). High taxes on property taxes could discourage investors whowould like to focus on the development of long-term assets.

Lookingto the future

Theleadership of the Polk County understands clearly the key challengesand opportunities that can be exploited to benefit the citizens.Population aging is a key demographic challenge that the county hasto address, given that the senior members of the society have uniqueneeds, such as the medical care. A plan to exploit the keyopportunities (including the strategic location of the county, askilled workforce, and a wide range of natural resources) will helpthe government unlock the economy and address the issue of financialconstraint.

Audienceof the reports

Thetwo reports, CAFR and CCRR, targeted three main audiences. First,they targeted the higher levels of government (including the state aswell as the federal government) since they make a significantcontribution to the public funds used to meet the needs of the peopleat the county levels (Calvert County Government, 2015). Secondly, thereports targeted the taxpayers, with the objective of showing themhow the money they contribute in the form of taxes were spent duringthe fiscal year 2015. The third category of audience is the membersof the public. The two counties (Calvert and Polk) intended to informthe members of the public about the key services that were deliveredin 2015 using the public funds to enhance their quality of life.However, the CCR report sought to address an additional category ofaudience, which comprised of the most vulnerable citizens, includingchildren and older adult).

Personalthoughts on “why the two reports”

Thetwo reports, CAFR and CCR, provide critical information about thesources as well as the appropriation of public resources. Inaddition, the reports are the most critical tools that the countygovernments could use to inform the stakeholders about the needs ofthe citizens, how resources generated in financial year 2015 wereused to address those needs, and the future plans. Therefore, theanalysis of the two reports makes it easy to determine thesensitivity of the respective county governments to the most pressingneeds of the citizens, the ability to appropriate the scarceresources, and establish future plans.


Governmentscommunicate regularly with their citizens. This communication isaimed to inform the stakeholders about the state of affairs of thejurisdiction and help them make critical decisions. The governmentcommunicates with citizens using different strategies, but theissuance of reports is the primary method. The CAFR informs thepublic about the financial condition of a public entity by presentingthe financial statements that indicate the appropriation of publicresources in a given financial period. CCR reports, on the otherhand, are used to pass information about different issues (such asthe financial budget) of concern to the public.


CalvertCounty Government (2015). ComprehensiveAnnual Financial Report for the fiscal year ended June 30, 2015.Prince Frederick, MD: Calvert County Government.

CalvertCounty (2016). Explore Calvert County. CalvertCounty Government.Retrieved June 29, 2016, from

IFRSFoundation (2013). Areview of the conceptual framework for financial reporting.New York, NY: FASB.

Mihaela,D. &amp Lulian, S. (2012). Internal control and the impact oncorporate governance, in Romania listed companies. IBIMAPublishing,2012, 1-10.

PolkCounty Government (2015). Acitizen’s guide to the Polk County budget.Balsam Lake, WI: Polk County Government.