The GASB plans to issue a new statement on October 19 to change the name Comprehensive Annual Financial Report (CAFR) to Annual Comprehensive Financial Report (ACFR) so that the racially offensive sounding acronym it produces is eliminated, according to August 30, 2021, board redeliberations.
The board unanimously voted to finalize GASB Exposure Document(ED) No. 3-42, The Annual Comprehensive Financial Report, which was proposed for public comment in April for the change.
State and local governments would apply the new statement to fiscal years ending after December 15, 2021, or earlier, the board agreed.
“The vast majority of comments were very supportive,” GASB Chair Joel Black said. “We did have a few people saying ‘we’re outside our lane’ and that sort of thing, but especially from our larger stakeholder organizations, each and every one of them was very supportive of why we’re doing this project and the project as a whole.”
The change will introduce a new acronym ACFR to eliminate CAFR, pronounced KAFF-ur, which sounds like “kaffir” — a slur used in South Africa to refer to black Africans after 1948 when the Apartheid system was established.
The offensive acronym has been used in accounting circles since 1979 to refer to the Comprehensive Annual Financial Report. The report is a set of U.S. government financial statements comprising the financial report of a state, municipal or other governmental entity that complies with the accounting requirements promulgated by the GASB.
Some respondents suggested two other names other than what was proposed as replacements to Comprehensive Annual Financial Report: Comprehensive Report of Annual Finances and Trends (CRAFT) and Audited Annual Financial Report (AAFR).
The board rejected those suggestions, viewing them as potentially confusing. The acronym CRAFT, though attractive, would not differentiate the report from the minimum requirement report that most governments prepare under U.S. GAAP and could generate confusion, GASB members said. Similarly, the name “Audited Annual Financial Report” would infer that GAAP financial statements are required to be audited, which is not correct since audit requirements are imposed by some other authority, or done voluntarily.
Overall, the board received 33 public comment letter responses by its July 9 deadline on the proposal.
Most professional organizations and governmental entities were supportive of the changes, agreeing that the simplest and most elegant answer was to transpose the first two words of “Comprehensive Annual Financial Report” so that all of the same elements remain in the title but would result in an acronym that is inoffensive, according to an analysis by senior GASB staff during the meeting.
Some individual respondents objected to the change, stating the board’s efforts appeared political and a “woke” overreach of its purview to develop U.S. GAAP.
Board members in response said renaming the report was highly warranted, is within the scope of the board’s mandate, and sent the right message.
“I think that this is very much needed,” GASB member Kristopher Knight said. “I know there was some concern about whether or not the board was stepping outside of its lane in addressing this,” he said. “And I firmly believe that it’s well inside the lane and really has nothing to do – in my personal opinion – with where somebody might align themselves politically, but everything to do with just doing the right thing and not wanting to necessarily associate yourself with something that has such a negative connotation no matter where it might be.”
This article originally appeared in the September 1, 2021 edition of Accounting & Compliance Alert, available on Checkpoint.
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