Project Pages

Renaming the Comprehensive Annual Financial Report

Project Description: The objective of this project is to consider whether a new name for the comprehensive annual financial report should be established and, if so, what name should be incorporated into the authoritative literature.

Status:
Drafting Exposure Draft  

Renaming the Comprehensive Annual Financial Report—Project Plan


Background: The acronym for the comprehensive annual financial report generally is pronounced KAFF-ur. It has been pointed out to the GASB that that pronunciation sounds like the word kaffir, which is a profoundly offensive term directed at Black South Africans.

The term comprehensive annual financial report was established in GAAP in 1979 by National Council on Governmental Accounting (NCGA) Statement 1, Governmental Accounting and Financial Reporting Principals. NCGA Statement 1 subsequently was carried over in force in 1984 by GASB Statement No. 1, Authoritative Status of NCGA Pronouncements and AICPA Industry Audit Guide. It is now woven throughout GAAP and widespread in practice.

Replacing the term would have no impact on the effort required to prepare, audit, or use GAAP-based financial statements. It should be noted, however, that because the terminology is ingrained in the AICPA’s auditing standards, the Blue Book, textbooks, and other professional literature, changing it would have a secondary impact as those publications are updated to reflect the change. There would not be any direct benefit to stakeholders in terms of making decisions or assessing accountability, but it can be asserted that demonstrating a willingness to make the effort necessary to avoid inadvertently giving offense would be beneficial in other ways to the GASB and its stakeholders.

Accounting and Financial Reporting Issues. This project would consider renaming the comprehensive annual financial report in response to concerns raised by stakeholders that the acronym for the report is potentially offensive when pronounced.

Project History:
  • Added to current technical agenda: December 2020
  • Consultative group appointed? No
Current Developments:

Work Plan:
 

Board Meetings

Topics to Be Considered

April 2021: Discuss ballot draft of a proposed Statement and consider for approval.
April–July 2021: Comment period.
August 2021 (VC): Redeliberations; discuss preballot draft of a final Statement; cost-benefit considerations.
October 2021 (VC): Discuss ballot draft of a final Statement and consider for approval.
 

Renaming the Comprehensive Annual Financial Report—Recent Minutes


Minutes of Videoconference, February 24–26, 2021
 
The Board reviewed a preballot draft of the Exposure Draft of a proposed Statement, The Annual Comprehensive Financial Report, and discussed clarifying edits.
 
During its discussion of Appendix C, Codification Instructions, the Board noted that the instructions normally do not modify nonauthoritative literature such as Concepts Statements. Due to the unique circumstances of this project, the Board tentatively decided to make a one-time exception to indicate where the new term should replace the existing term in Concepts Statement No. 3, Communication Methods in General Purpose External Financial Reports That Contain Basic Financial Statements. In making that tentative decision, Board members noted that the tentative decision should not be interpreted as establishing a precedent for future Codification instructions. The Board also considered but tentatively decided not to address that tentative decision in the Basis for Conclusions.
 
Lastly, the Board discussed whether the “materiality box” is relevant to a Statement that does not affect the amounts reported in annual financial reports. The Board recognized that the materiality box has been included in all Statements issued previously, even those containing provisions for which quantitative materiality similarly was not relevant. Board members noted that qualitative materiality may be relevant to such provisions. Board members also noted that they did not want to set a precedent for removing the materiality box from future Statements. Therefore, the Board tentatively decided to retain the materiality box in the Exposure Draft. The Board also tentatively decided not to address that tentative decision in the Basis for Conclusions.

Minutes of Videoconference, January 12—14, 2021

The Board began deliberations on the Renaming the Comprehensive Annual Financial Report project by first deliberating whether to address the concerns about the acronym for the comprehensive annual financial report with a primarily educational-based approach or a standards-setting approach that would rename the report. The Board tentatively decided to change the name of the report. The Board then tentatively agreed to propose changing the name to annual comprehensive financial report (ACFR).
 
With respect to effective date and transition provisions for the name change, the Board tentatively decided to propose an effective date of fiscal years ending after December 15, 2021, with earlier application encouraged. The Board also tentatively decided not to propose transition provisions.
 
The Board then reviewed a draft Standards section of an Exposure Draft. The members did not suggest any changes to that draft section.
 
Lastly, the Board discussed cost-benefit considerations related to the proposed name change and tentatively concluded that the expected benefits of the proposal justify its perceived costs.
 

Renaming the Comprehensive Annual Financial Report—Tentative Board Decisions to Date


The Board tentatively agreed to address stakeholder concerns about the acronym for the comprehensive annual financial report by amending existing standards to change the name of the report. The Board also tentatively decided to propose the following:
  • The replacement name would be annual comprehensive financial report (ACFR).
  • The effective date would be fiscal years ending after December 15, 2021, with earlier application encouraged.
  • No transition provisions will be established.
The Board voted unanimously to proceed to a ballot draft of an Exposure Draft of a proposed Statement, The Annual Comprehensive Financial Report.