Introduction
CAFRs, or comprehensive annual financial reports, provide a summative analysis and overview of a city’s financial standing to the public. They are outstanding sources of information, but a person with no accounting background might find them difficult to understand. The main reason is that CAFRs use accounting terminology and frameworks as per the norms and standards of financial reporting. The most difficult elements include technical jargon, complex financial statements, and the size of the document, but Atlanta CAFR’s key strength is the use of visual aids.
Challenges in Reading Comprehensive Annual Financial Reports
The first and key challenge in reading the CAFR is the technical jargon or terminology. For example, the term “Deferred Outflows of Resources” is not as evident for a person with no accounting knowledge as for an accountant (City of Atlanta Department of Finance, 2022, p. 13). Although it is defined in the glossary, it is also excessively technical.
The second issue is the complex nature of financial statements. For instance, the statement of net positions is intricate and interrelated, making it challenging for a layperson to interpret and analyze the data presented (City of Atlanta Department of Finance, 2022). The final roadblock is the sheer size of the report, which is overwhelming considering how much detail each page contains. However, Atlanta CAFR is highly readable primarily due to visual aids and illustrations, a significant strength of the report.
Conclusion
In conclusion, a significant advantage of Atlanta’s CAFR is its incorporation of visual aids. Still, the general challenges are specialized terminology, intricate financial statements, and the extensive length of the document. Individuals lacking an accounting background may struggle to comprehend them because CAFRs employ accounting language and structures based on established norms. However, they still offer a thorough assessment and summary of a city’s financial position to inform the public. To improve accessibility, cities might consider including simplified summaries or interactive digital versions alongside the full report.
Reference
City of Atlanta Department of Finance. (2022). Popular annual financial report. Web.