1 The Comprehensive Annual Financial Report Wisconsin Legislative Audit Bureau April 2003

2 Sound Financial Management u Meets ongoing cash needs u Accumulates reserves u Allows for intergenerational equity u Limits debt to a prudent level u Reports finances in a timely and meaningful way

3 Financial Audits u Attest to the fair presentation of the financial statements u Ensure assets are safeguarded u Assess the internal controls and compliance with laws u Ensure compliance with debt limits and other fiscal requirements

4 State Financial Reports u Annual Fiscal Reports (Budgetary Basis) u Comprehensive Annual Financial Report (GAAP)

5 Annual Fiscal Report u Is primarily a cash basis of accounting (checkbook accounting) u Is easy to understand u Is based on Wisconsin Statutes u Provides a scorecard on whether budget is balanced

6 Annual Fiscal Report u Is subject to manipulation by transfers between years u Provides an incomplete picture of finances

7 Comprehensive Annual Financial Report (CAFR) u Recognizes all current liabilities in the General Fund u Is consistent for all government entities and across years u Allows bond rating agencies to conduct financial analyses u Serves as an annual report for citizens

8 General Fund Balance June 30, 2002 Budgetary Basis$ 74,638,000 GAAP Basis (1,484,333,000) Difference $ 1,558,971,000

9 GAAP Recognizes Liabilities at Year-end Shared revenue liability $492,878,000 Projected income tax refunds $658,813,000 Unpaid Medicaid claims $160,095,000

10 Assembly Bill 178 (Special Committee on Improving Wisconsin’s Fiscal Management) u Requires GAAP-based statements u Directs the Governor to act if the GAAP deficit increases u Funds the Budget Stabilization Fund (Rainy Day Fund) u Funds a GAAP Deficit Reduction Fund

11 Changes in the Financial Reporting Model u Requires management to discuss finances in simpler language u Adds a government-wide statement u Records the value of roads and bridges and requires condition assessments u Treats the University of Wisconsin as a business enterprise

12 Improved Financial Management u Responsible budgeting u Accurate and timely reporting u Effective auditing

13 The Comprehensive Annual Financial Report Wisconsin Legislative Audit Bureau April 2003