getting prepared to prepare your own financial statements

Popular Reporting

Presented by

Donna Collins

Milestone Professional Services

What is a Popular Report?• Annual Financial Report designed to meet

the needs of a broader audience than traditional financial reporting– Citizens– Other interested parties

• Does not replace the CAFR• May be a separate report or part of a

larger document with financial and non-financial information

What is a Popular Report? cont.

• Does not have to be prepared on a GAAP basis

• Designed to supplement traditional financial reporting

• Recognized for excellence by the GFOA-Award for Outstanding Achievement in Popular Annual Financial Reporting

Why prepare a PAFR?• Great opportunity to “interpret” your CAFR

for your citizens and news media• Rules and requirements are very flexible• Most of the information is already available

as a result of the audit process and can be prepared in conjunction with your annual financial report

Guidelines for Preparing a PAFR• Determine an appropriate perspective• Provide useful analysis, not merely

disclosure• Be objective• Prepare a user friendly document• Develop a distribution plan

Determine an appropriate perspective

• Identify your target audience– Know what information your citizens want –

what are the hot topics in your community– Don’t try to please everyone– Sophistication of presentation depends on

intended readers• Education, interests and involvement in local

government

Determine an appropriate perspective cont.

• Define clear objectives for the report– Know the message you are trying to

communicate– Focus on key financial data, accomplishments

and initiatives that communicate this message– If there are issues within your community

consider this forum to address them

Provide useful analysis• Focus on the key questions• Address whether publicized plans turned

out as expected and whether any new projects were implemented

• Address significant changes in key policies or programs

• Remember that trend analysis should be focused on the impact on future tax rates, utility rates charged and levels of service

Be Objective• Popular Reports are subject to bias

– Documents lack full disclosure– Provide true accountability - not just a public

relations package• Balance is crucial to effective

communication– Discuss favorable trends– Also acknowledge and address problems

Prepare a user friendly document

• Keep it short• Use journalistic style of writing• Include pictures, graphs and charts• Vary the layout• Simplify the financial information

presented• Ensure report topics flow and message is

consistent throughout the document

Develop a distribution plan• Identify locations where the Popular

Report can be placed or distributed• Make use of speaking engagements of

elected officials to distribute the PAFR• Consider the impact of the news media• Place report on your website

What to include• Most common items

– Letter from the mayor or county administrator– Analysis of general fund activity– Analysis of major utility activity– Summary of Statement of Net Assets and

Statement of Activities

What to include cont.

• Other great ideas– Capital Improvement Plans– Future Initiatives and their funding– Analysis of other items of interest such as

large grants or donations

GFOA Award Program

•Award for Outstanding Achievement in Popular Annual Financial Reporting

Award Program - Eligibility Requirements

• Must prepare CAFR• CAFR must have been awarded a

Certificate of Achievement for Excellence in Financial Reporting for most recent year submitted

• Any questions regarding eligibility are determined by GFOA Technical Services Center

Award Program – Report Requirements

• PAFR must be received by GFOA within 6 months of the fiscal year end

• Deadline is not formally extended on regular basis; however, one-time thirty day extension may be granted under certain circumstances. (Must be approved in advance and cannot be granted for succeeding years.)

Award Program – Report Requirements cont.

• Report must advise readers of the availability of the CAFR

• Financial information should be derived from the CAFR

• Financial information should have same measurement focus as CAFR although presentation may be different

Award Program – Report Requirements cont.

• Popular Report may include only selected funds or component units but this must be disclosed

• Some form of narrative or graphic analysis for items of significant interest or concern is required

• May not reproduce Certificate from CAFR program within the popular report

Award Program – Report Requirements cont.

• Application must be completed• Fees apply

Awards Program – Review Process

• Each PAFR is evaluated by four judges• Judges may not evaluate Popular Reports

for governments located in their state of residency

• PAFR judges must certify their independence in both fact and appearance

• CPA firms may not have members that review a PAFR for which they served as the auditor

Awards Program – Review Process cont.

• Each judge completes an evaluation form broken down into five categories that carry varying weights of importance towards the final grade– Reader appeal - 10%– Understandability - 25%– Distribution methods - 7.5%– Other (creativity, etc) - 7.5%

Reader Appeal• Report is short enough to maintain interest• Format is logical and easy to understand• Typography is easy to read and appealing

to readers• Photographs, charts, graphics or other

artwork enhance the report’s appeal

Understandability• Avoids jargon and technical language• Appropriate graphics are used to enhance

financial data presented• Narrative explains financial data and

highlights significant items of interest• Report helps users to understand financial

data in proper context• Potential for misinterpreting information is

minimized

Distribution Methods• Number of reports distributed is

appropriate for target audience• Mode of distribution is appropriate for

target audience

Other• Report is notable achievement for

government of this type and size• Report is innovative or creative in form or

content• Report is useful to users of entity’s

services• Report makes the government more

attractive to interested parties (e.g. new businesses)

Awards Program – Review Process cont.

• Remaining 50% is based on overall quality and usefulness of the report, taking into consideration the four previous categories

• Each category is ranked on a scale of 1-5 with 1 being poor and 5 considered excellent

• All responses of 1,2 or 3 require written comments from the judge

Awards Program – Review Process cont.

• TSC staff calculate the weighted average score from each reviewer. The lowest score is thrown out. The remaining scores must be 75% or higher for the report to be eligible for the award.

Awards Program – Review Process cont.

• If the average score falls between 70-74.99%, the report is subjected to review by TSC staff. This reviewers score replaces the lowest of the previous three scores and a new average is calculated. An average score of 75% makes the report eligible for the awards program.

Awards Program – Review Process cont.

• TSC staff compile all written comments offered by each of the four judges where a 3 or less was given and edit for consistency and adherence to PAFR program policies. These are provided to the report preparers as suggestions for improvement.

2005 Award Winners• For 2005, 144 Popular Reports were

submitted with 140 of these receiving the Award for Outstanding Achievement in Popular Annual Financial Reporting

• Included in this list were only 9 entities from Florida

2005 Award Winners cont.

• Alachua County• City of Gainesville• City of Miami• City of Miami Springs• Hillsborough County• Manatee County• Polk County• Putnam County• Town of Palm Beach

2005 Award Winners cont.

•Picture your government on this list!

Questions?