How is the budget process different in a governmental environment as opposed to a business environment? What is the interrelationship between an organization's budget and CAFR?© BrainMass Inc. brainmass.com December 15, 2022, 8:06 pm ad1c9bdddf
Update: Thanks for your question. Basically, it boils down to the fact that CAFR is for government budgeting. It has many of the same items; however in CAFR there is a statistical component which is required. In a government setting, there are no shareholders to report to, whereas in a business environment there are.
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You pretty much asked the same question twice. The difference between the government budget and the business budget is CAFR, and the statistical component. Otherwise, the two are very similar. Consider:
CAFR and budget differences
A Government budget document is a blueprint for a "specific grouping" of government agencies spending over the course of an annual financial period. General Purpose Budgets contain both the spending categories of specified units of government, such as school districts, and social services, transportation, police, fire, and park services; along with estimates of revenues expected to occur during the year, such as investment return; overrides of money from the previous year, and tax payments.
A CAFR or AFR, as it is called for any publicly traded company, such as IBM or Microsoft (who are required by the U.S. Securities and Exchange Commission, SEC, to send their AFR to every shareholder each year, by contrast, a CAFR, is meant to report the overall financial results, in whole, of all agencies and departments, both budgetary, autonomous, enterprise (such as is the case in government of city owned golf courses), recycling, water, sewer, and financial management agencies, which were created since the inception ...