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Government financial reports are an important part of democracy ( or a consititutionally limited republic) but often not widely read or discussed. Online reporting by governments makes these government financial reports more accessible but not necessarily more understood by the public.

Governmental financial reports can include not only the budget or "general fund" as often referred to but also several other types of government financial reports, financial statements, performance reports and audits. Many governmental financial reports are online and opened to critical review by constituents, taxpayer groups, bond rating firms and creditors. Ratio analysis is one of the ways to examine the financial conditions of a government from a revenue potential for generating bond ratings for instance. One online source for state and local financial reports (some called Comprehensive Annual Financial Reports or CAFR) is from the Governmental Accounting Standards Board (GASB)

One of the key elements in the financial statement is the Management Discussion and Analysis (MD&A). The MD&A is designed to provide a readable version of the technical financial statements. In June of 1999, the Governmental Accounting Standards Board adopted standard 34. Standard 34 requested all cities and states in the US to include a MD&A in their financial statement or CAFR.

CAFR vs. Budget

The CAFR shows more comprehensive accounting entries that budget reports do not, and also should not be confused with "rainy day funds" or required pension surpluss holdings that are gennerally included in many government budgetary reports and process.

A budget is for a select grouping ("general fund") of accounts showing only the more commonly known revenue income from taxes, fees, licenses, fines and a select few revenue sources. The common government budget report also includes, expenses such as salaries, police, and entitlements will be shown along with required holdings to fund pensions, insurance and bonds.

The CAFR shows not only selectively presented budget items, but also government "enterprise operations" or "enterprise funds", investments, and the return on them (or loss). These funds include but are not limited to assets and holdings to back pension and retirment obligation reserves as required by law.

A "Comprehensive Annual Financial Report" or "CAFR" is a government book keeping practice which started in the post WWII economic boom and replaced what was regularly an "off-the-books" practice called the "general fixed asset account group" . The various levels of government; "general government" or the federal United States, individual state governments and government agencies each began producing a CAFR in the late 1940s to early 1950s to catalog an accurate picture of institutional funds, or financial holdings, assets and total investment incomes for those government and nongovernmental entities using the report, which is above and beyond the budget process. In 1945, the Government Corporation Control Act, began the auditing of wholly owned government corporations and mixed ownership corporations,( those that government may have controlling holdings in but operate as private corporations) all of which may come under the term "enterprise funds".

While a budget might indicate that the government or agency has financial trouble and debt, (because of excess spending within the select grouping of "general fund" accounts presented), the CAFR will normally indicate that government possesses large holdings considerably over what is shown in a budget report or "general fund" alone. Examples from recent history include, Jessie Ventura's career, punctuated by his returning some of the government surplusses to voters as govenor of Minnesota. Other rare news events have highlighted the off-the-budget holdings and "enterprise funds" of government. In one widely reported example in the late 1990s (Los Angeles) Orange County California lost $1-Billion on investments in the derivatives market.

• Single Audit
• Government Accountability Office,
• Revenue (bottom line vs. "top line")
• Government-owned corporation
• Budget theory
• Comprehensive income
• Permanent fund
• Public company
• Crony capitalism
• Government Accountability Office investigations of the Department of Defense
• Federal Accountability Act(Canada)

• GAO History Government Accounting Office

• PDF - Capital Asset Accounting System (Permission to quote granted in the document)

• Governmental Accountancy Mathematically Defined