Understand the purpose and requirements of an ACFR.
An ACFR provides a comprehensive overview of the school district’s financial position, operations, and compliance with legal requirements. We used ASBO International resources such as the Annual Conference & Expo workshops and the Certificate of Excellence in Financial Reporting checklist, and other districts’ ACFRs to better understand the requirements. The ASBO checklist proved to be the most valuable tool in our preparation.
Gathering the historical data was undoubtedly the most difficult part of our ACFR preparation. It has been a valuable tool to refer community members to when they have questions about the district’s overall financial health.
Decide what stakeholders make up your financial reporting team.
Creating an ACFR is a team effort. Assembling that team and gaining the support of our district leadership before beginning this process was critical. The first year we wanted to create an ACFR, not all members were on board so we postponed to the following year. Our independent auditors, school board members, superintendent, and finance department staff all had to agree on moving forward before we began.
Gather financial data and documentation.
After assembling the team, we divided sections of the ACFR and assigned responsibility to individuals for completion. Most of the content in the report is from past or current district financial records. These records include audited financial statements (Management’s Discussion & Analysis, Basic Financial Statements, Notes to the Financial Statements, and Supplementary Information) and historical data regarding revenue collections, enrollment, population, and economic factors for your city/county.
Financial statements must be audited to ensure the data are accurate and comply with reporting standards. The audit checks for discrepancies confirms proper internal controls and verifies all disclosures are included.
Gathering the historical data was undoubtedly the most difficult part of our ACFR preparation. Ultimately, using the county and city government ACFR data provided the best information.
Our first ACFR did not include enough information in the statistical section to receive the Certificate of Excellence in Financial Reporting through ASBO. While this was disappointing, our team was able to utilize the comments provided by the review team and improve our ACFR. After additional work and data gathering, our second submission qualified for the award.
Publish the report.
Once complete, we presented the ACFR to our board members and published it on the district’s website. It has been a valuable tool to refer community members to when they have questions about the district’s overall financial health. Our district plans to continue this new tradition of financial transparency.
Don’t be dissuaded by these challenges:
- Data Management: Ensuring all relevant financial data is accurate, up to date, and easily accessible can be a major hurdle, especially if records are disorganized or fragmented across multiple systems.
- Staffing and Expertise: Developing the necessary internal expertise and assembling a team with the right skills can take time. In some cases, school systems may need to invest in professional development or hire external consultants.
- Time and Resource Constraints: The preparation of the first ACFR is a labor-intensive process that requires a significant amount of time, especially if staff are not familiar with the process. Budgeting for additional resources or personnel may be necessary.
While creating the first ACFR for a school system can be challenging, the benefits are invaluable: improving financial transparency, building trust with the community, and enhancing accountability. Using the tools at your disposal, assembling the right team, and hitting potential challenges head-on are all ways to ensure your first ACFR is successful and serves as a resource for both the district and its stakeholders.