Healthy relationships are key to your CAFR
Imagine this: You're collecting information and preparing your comprehensive annual financial report (CAFR) report when suddenly, you spill a cup of coffee on your keyboard causing you to unintentionally replace a number.
The mistake could be minor, or it could be your company's equivalent to a London Whale. No matter how large or small the error, you'll feel the consequences—from the amount of time spent fixing mistakes to damaging your public reputation.
Manual compilation of data will lead to errors
In 2013, the National Association of State Comptrollers reported it takes an average of 187 days to complete its CAFR reports. Most of this time is spent manually collecting siloed, unstructured information from fragmented systems and multiple departments by a small team.
Many teams are also challenged by the idea of who owns and maintains data sets. Data from multiple formats must be manually compiled in a way that allows for analysis and distribution. And without technology built specifically to support this process, the man-hours add up quickly.
The accuracy of this information is crucial to maintaining relationships with state and local government, external auditors, and rating agencies because the financial and operational health of a local community depends on it. The financial health of your data and reports can be directly impacted by bond ratings issued, which in turn are impacted by a variety of actions—including the timeliness and accuracy of providing financial information.
External auditors and local governments aren't the only ones counting on the accuracy of the CAFR report. Additional audiences for the CAFR report include:
- Electronic Municipal Market Access (EMMA)
- Government Finance Officers Association (GFOA)
- City council
- Local community
- Rating agencies
Your relationships are on the line
Inaccurate data and reports impact more than your department. Inconsistencies in data put your relationships with external auditors and the city council at risk—adding pressure to increase the efficiency and effectiveness of your team.
If the relationships with either auditors or city council are unhealthy, your team comes under additional scrutiny and pressure to do more with less. It also creates pressure for process improvement and potential for employee turnover.
Rating agencies add to the pressure by examining your accounting and report information on a regular basis. The community that consumes your financial data directly impacts the funding for special projects and bond issuance for your community. A recent accounting error in a bond issuance cost one county $10 million. An honest human error in a messy system can have daunting results nobody wants mentioned in a performance review.
Better process, better relationships
The National Association of State Auditors, Comptrollers, and Treasurers (NASACT) cite continuing disclosure as a best practice—challenging governments to move to a more fluid financial reporting process, so that reporting updates are made as data is provided. The NASACT recommends updating investors and all parties on a quarterly basis, no more than 40 days after close of quarter.
Increasing the frequency of reporting with no additional resources might seem like an uphill battle, but by making process improvements, you can free up resources to increase the frequency of reporting.
Never worry about a spilled cup of coffee again. Check out this infographic to see how you can improve your CAFR process.