If you have tried to look up a city's financial information, you have probably encountered the term ACFR, or its predecessor, CAFR. It is the primary document for understanding a local government's finances, but it can run over 200 pages and is written in accounting language that discourages most readers.
This guide explains what an ACFR is, what is in it, where to find one, and which sections matter most for assessing a city's financial health.
ACFR vs. CAFR: What Changed?
CAFR (Comprehensive Annual Financial Report) was the standard name for decades. In 2021, the Government Finance Officers Association (GFOA) renamed it to ACFR (Annual Comprehensive Financial Report) as part of a broader effort to modernize terminology.
The document itself has not changed. Both terms refer to a local government's complete, audited annual financial report. You will still encounter "CAFR" frequently, particularly in older documents and financial systems.
What Is an ACFR?
An ACFR is the official audited financial report that cities, counties, school districts, and other local governments publish each year. It is prepared in accordance with accounting standards set by the Governmental Accounting Standards Board (GASB) and reviewed by an independent auditor, who issues an opinion on whether the financial statements are presented fairly.
ACFRs are the primary source for:
- Bond investors conducting credit analysis
- Journalists and researchers covering municipal finance
- Residents and advocates seeking government accountability
- Rating agencies (Moody's, S&P, Fitch) assigning credit ratings
- Financial platforms like MuniSpot
What's Inside an ACFR?
A typical ACFR has three main sections:
Section 1: Introductory Section
- Letter of transmittal: Written by the chief financial officer, summarizing major financial developments
- Organizational chart: Who runs the government
- List of principal officials
This section is not audited and should be read as background context, not as verified financial data.
Section 2: Financial Section (The Core)
This is where the numbers are. It contains:
Independent Auditor's Report The auditor's opinion on whether the financial statements present the city's finances fairly. Look for an "unmodified" (clean) opinion. A "qualified" or "adverse" opinion is a serious red flag.
Management's Discussion and Analysis (MD&A) Written by finance staff, this narrative summarizes the year's financial results, major variances, and capital activity. It is usually the best starting point for understanding what happened in a given year.
Government-Wide Financial Statements Two statements that give the most complete, full-entity picture:
- Statement of Net Position (balance sheet): assets, liabilities, and net position for the entire government
- Statement of Activities (income statement): revenues and expenses by program
Fund Financial Statements Governments use fund accounting, which creates separate accounting pools for different purposes:
- Governmental funds: general fund, special revenue, capital projects, debt service
- Proprietary funds: enterprise activities like utilities or airports that operate like businesses
- Fiduciary funds: assets held in trust, such as pension funds
Notes to the Financial Statements Often longer than the financial statements themselves, the notes contain critical disclosures including:
- Pension liability details (GASB 68)
- Debt schedules and maturities
- Accounting policies
- Contingencies and risks
Required Supplementary Information (RSI) Post-note disclosures required by GASB, including multi-year pension funding schedules.
Section 3: Statistical Section
Ten years of trend data, typically including:
- Revenue and expenditure history
- Debt ratios over time
- Assessed property values
- Major employers and demographic indicators
This section is useful for identifying trajectory: whether a city's finances are improving or deteriorating over time.
Where to Find an ACFR
The city's website Most cities post their ACFR in the Finance, Budget, or Transparency section of their website. Searching "[City Name] ACFR" or "[City Name] Annual Financial Report" usually turns it up.
EMMA (Electronic Municipal Market Access) The Municipal Securities Rulemaking Board's EMMA platform (emma.msrb.org) hosts continuing disclosure documents from municipalities with outstanding bonds, including ACFRs.
Government audit portals Municipalities that receive federal grants are required to submit audited financial statements publicly. Many are accessible through government transparency portals.
MuniSpot MuniSpot aggregates and standardizes financial data from ACFRs across 14,000+ U.S. municipalities, so you can analyze key metrics without downloading and parsing hundreds of pages yourself.
The Most Important Numbers in an ACFR
If you only have 10 minutes, focus on these:
| What to Look For | Where to Find It | Why It Matters |
|---|---|---|
| Change in net position | Statement of Activities | Is the city gaining or losing financial net worth? |
| General fund balance | Fund financial statements | The city's primary savings cushion |
| Fund balance as % of expenditures | Calculate from fund statements | GFOA recommends a minimum of 17% (two months of expenditures) |
| Net pension liability | Statement of Net Position / Notes | Unfunded pension obligations |
| Debt outstanding | Notes (long-term obligations) | Total bonded debt burden |
| Auditor's opinion | First page of financial section | Any qualifications are serious red flags |
ACFR vs. Budget Document
The ACFR and the city's annual budget are different documents serving different purposes:
| ACFR | Budget | |
|---|---|---|
| Purpose | Reports what actually happened | Plans what will happen |
| Audited? | Yes, by independent auditor | No |
| Timing | Published 6 to 12 months after year end | Published before the fiscal year begins |
| Basis | GAAP (GASB standards) | Often modified accrual or cash basis |
| Use | Credit analysis, accountability | Planning, appropriation |
For assessing financial health, the ACFR is more reliable. It shows actual results, not projections.
Common ACFR Terminology Decoded
| Term | Plain English |
|---|---|
| Net position | Total assets minus total liabilities (government's equity) |
| Governmental activities | Core government services: police, fire, parks, admin |
| Business-type activities | Enterprise operations: utilities, airports, golf courses |
| General fund | Main operating fund for day-to-day services |
| Fund balance | Accumulated surplus in a fund |
| Unrestricted net position | Net worth available for any purpose (often negative) |
| Net pension liability | The gap between what is owed to pensioners and the value of assets set aside to pay them |
| OPEB | Other Post-Employment Benefits (retiree health insurance) |
| Modified accrual | Accounting method used for most governmental funds |
| Full accrual | Accounting method used for government-wide statements |
| Primary government | The main entity (e.g., the city itself) |
| Component unit | A related entity included in the ACFR (e.g., a housing authority) |
ACFRs and MuniSpot
Extracting meaningful data from ACFRs at scale is technically challenging. The documents are long, inconsistently formatted, and published as PDFs. MuniSpot has built infrastructure to parse, standardize, and normalize ACFR data across thousands of municipalities, making it possible to:
- Compare a city's metrics to national benchmarks
- Track financial trends over multiple years
- Screen municipalities by specific financial criteria
Explore ACFR data for any U.S. city on MuniSpot
MuniSpot is not a financial advisor; this content is for educational purposes only.