Public Finance Glossary

Comprehensive Annual Financial Report (CAFR)
A detailed presentation of the community’s financial condition. It reports on the community’s activities and balances for each fiscal year.

Organizational Chart
A diagram showing the structure of an organization and the relative rank and order of individuals, positions, jobs or groups within the organization.

Independent Auditor’s Report
The auditor’s report is a formal opinion issued by either an internal auditor or an independent external auditor as a result of an internal or external audit or evaluation performed on a legal entity or subdivision. The report is provided as an assurance service in order for the user to make decisions based on the results of the audit.

An auditor’s report is considered an essential tool when reporting financial information, particularly in business. Audited entities rely on auditor reports to certify their information in order to attract investors, obtain loans, and improve public appearance. Some have even stated that financial information without an auditor’s report is “essentially worthless” for investing purposes.

Government-wide Financial Statements
A document designed to provide readers with broad information about the community’s finances.

Statement of Net Position
A document which presents information on all of the community’s assets and liabilities with the difference between the two reported as the net position.

Statement of Activities
A document which presents information on how the community’s net position changed during the most recent fiscal year.

Fund Financial Statements
Provides information about groups of related accounts that are used to maintain control over resources for specific activities or objectives.

Government Funds
Government funds are used to account for essentially the same functions reported as government activities in the government-wide financial statements but unlike government-wide financial statements, government financial statements focus on near-term inflows and outflows of spendable resources as well as on balances of spendable resources available at the end of the fiscal year.

Proprietary Funds
Proprietary funds offer financial information about services for which the community chanrges customers, both external customers and internal departments of the local government.

Enterprise Funds
Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements.

Internal Service Fund
Fund used to report activities and accumulate and allocate the costs of services that are provided among the community government’s various functions.

Fiduciary Funds
Fiduciary funds are used to account for resources held for the benefit of parties outside of the community government. The local government is the trustee or fiduciary responsible for assets that can be used only for the trust beneficiaries per trust arrangements. Pension trust funds and agency funds are reported as fiduciary funds.

Capital Assets
Capital Assets are all types of property that are held by a company or government entity for investment and useful purposes. While most types of property are considered capital assets, some types of property are not included as capital assets, including (land and buildings).

Long-Term Debt Obligations
Loans and financial obligations lasting over one year. Long-term debt which would include any financing or leasing obligations that are to come due in a greater than 12-month period. Such obligations would include company bond issues or long-term leases that have been capitalized on a firm’s balance sheet.

Joint or Multi-Governmental Ventures
Arranegements by organization that are owned, orperated, or governed by two or more participants as separate specific activities subject to join control in which both parties retain an ongoing financial interests or responsibility.

Property Tax
Tax imposed by municipalities based on the estimated value of property.

Compensated Absences
Grants of vacation and sick leave benefits to employees. Compensatory time granted to certain employees for hours worked in excess of a normal work week which are not taken within the current biweekly pay period.

Capital Contribution
Government grants or other aid used to fund capital projects. These contributions are recognized as revenue when the expenditure is made and amount become subject to claim for reimbursement.

Interest Rate Risk
Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of investments.

Credit Risk
Credit risk is the risk that an investor or other counterparty to an investment will not fulfill its obligations.

Custodial Credit Risk
Custodial risk for deposits is the risk that in the event of a financial institution’s failure their plan would not be able to recover its deposits.

Concentration of Credit Risk
Concentration of credit risk is the risk of loss attributed to the magnitude of a party’s investment in a single issuer.

Foreign Currency Risk
Foreign currency risk is the risk that changes in exchange rates will adversely impact the fair value of an investment.

Municipal Bond
Security issued by or on behalf of a local authority.