Friday, January 20, 2012

Comprehensive Financial Annual Report (CAFR)

English: Map of the African Union with suspend...Image via Wikipedia

Formed in the sprawling suburbs of Addis Ababa, Ethiopia, in 1963 under the tutelage of the renowned Statesman Haile Selassie, the Organization of Africa Unity changed named in 2002 to become the African Union (AU). The AU was formed exclusively to spearhead social, economic, and cultural values in the African continent that is populated by diverse communities speaking various vernaculars and divided along colonial powers Italy, Britain, Portugal, and France respectively.

A Comprehensive Financial Annual Report (CAFR) is a large document that is produced by organizations to provide vital information to officials, citizens, auditors, and investors (Mikesell, 2011, pp. 77). It is a report that is available to the general public and generally documents how funds are dispensed and accounts utilized. The AU's CAFR is one collected from a broad range of willing donors that include the United States, the European Union, and member states whose economies show signs of stability. The money collected in the form of aid is then used to serve the various departments that are part of the Union. Some of the aid coming from donor nations is used to fight pandemics and keep peace in volatile regions of the world such as in Somalia, Darfur, and other conflict prone areas of the mighty continent. Poor tax collection, bleak transparency index, misuse of resources, widespread corruption, and mismanagement are some factors that make the Union financial to operate below average and show signs of decline.

The report is geared towards giving donors vital information on how finances are utilized and how transparency and poverty reduction is being tackled. A $200 million budget was released in 2010 to finance various developmental projects. 30% of that money was earmarked for restoration of peace in afflicted areas, 77% for development, and 10% for fighting corruption (Tekle, Sudan Tribune, January 31, 2010). Citing Schick (1998), Sophia (2002) explains that the budget composition of poor countries within the continent is by far different from those of developed countries. An aspect know as the common pool problem where officials involved in the budget decision-making process fight over public resources hamper efforts to distribute or dispense finances equally (Sophia, 2002). The African Union budgetary processes suffers unrealistic budgeting where the budget is commonly accepted as a farce, hidden budgeting where the budget is known to a select few, and escapist budgeting where expenditure is authorized while knowing it will never materialize. Unpredictable governments hinder stakeholders’ prospects of comprehending its aims, objectives, and outcomes.


Mikesell, J.L. (2011). Fiscal Administration: Analysis and applications for the public sector (8th ed.). Boston, MA: Wordsworth Cengage Learning.

Sophia, G. (2002). Budget Institutions and Fiscal Performance in Africa. Center for Research in Economic Development and International Trade, University of Nottingham. Retrieved from

Schick, A. (1998) A Contemporary Approach to Public Expenditure Management: World Bank Institute.

Tekle, T.A. (Sudan Tribune, January 31, 2010). USD 200 million agreed for 2010 Africa Union Budget. Retrieved from,33967
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