Financial Reporting: Comprehensive Annual Financial Report

Please prepare a response post to the following post. In response to your peers, discuss whether you saw the same differences in your report. Were there any other differences your classmates did not mention that you felt were relevant or significant? Explain. (I have attached ac copy of my post to compare to)
For the purposes of this discussion, I will be examining Bangor, Maine’s Comprehensive Annual Financial Report for the year of 2022. When looking at the auditor’s opinion given for this city’s annual report there are several components that are present that one sees in for-profit business auditor opinions as well. For example, the audit opinion for the City of Bangor contained the auditor’s “opinions,” “basis for opinions,” and “responsibilities of management…,” much like a for-profit business audit opinion does. The audit opinion also included sections regarding supplementary information, the auditor’s responsibilities, “other reporting required by Government Auditing Standards,” and “change in accounting principle,” (City of Bangor, 2022) In order to conduct this audit, Government Accounting Standards and Government Auditing standards were used which is unlike for-profit business financial statements (Hoyle, et al., 2021).
It is common for differences to be present between net changes in fund balances and changes in net position as the accounting for fund financial statements and government-wide financial statements can differ. The City of Bangor provided a reconciliation within the CAFR to explain such discrepancies. The first difference of note is how capital outlays are reported. For government funds this item is reported as an expenditure but on the statement of activities capital outlays are allocated over their useful life and reported as a depreciation expense leading to a reconciliation total of $10,233,240 (City of Bangor, 2022). In addition, the city also reconciled differences related to financing. For this, repayments are noted as expenditures in the fund report but reduce long-term liabilities for net position totaling $5,707,012 for reconciliation (City of Bangor, 2022).
The CAFR contains the necessary parts with an introduction, financial section, and statistical section, along with additional supplementary information (Hoyle, et al., 2021). The information was presented in a way that was useful as it was organized, detailed, and easy to understand. There are some obvious differences though between this and a for-profit statement. The first being the types of financial statements presented and the information included. For example, a for-profit statement has a balance sheet that presents assets in relation to liabilities and stockholder’s equity. The City of Bangor’s CAFR contains a balance sheet that includes assets and liabilities, but also deferred inflows of resources and fund balances. The other financial statements include a statement of net position and statement of activities. The activities identified are governmental activities and business-type activities, a typical for-profit statement does not have these designations. The City of Bangor also provided statements for the general fund, proprietary funds, and fiduciary funds, which are not included in for-profit statements. Overall, though some similarities between for-profit statements and government statements exist the information provided and the way it is presented differ in significant ways, but the city report provides an adequate notes section that allows a user to understand the statements despite it being different from one might typically be used to.