Figure 1

The title of Figure 1 is The State Faces Potential Consequences if Entities are Unable to Prepare Year-End Financial Statements Accurately and On Time.

Figure 1 is a top-down flowchart that starts with the statement of cause as entities are unable to produce monthly and annual financial statements on time. A ribbon follows that indicates potential effects on timing and quality of the State’s CAFR. Three boxes on the left show potential consequences if the CAFR is not available by the April 1 bond disclosure deadline or soon thereafter, and the State may issue unaudited financial statements. This could negatively affect credibility among investors, the public, and credit rating agencies, which may result in a lower credit rating for the State. Three boxes on the right show potential consequences if the CAFR is published by the bond disclosure deadline by relying more extensively on departmental financial statements that include estimates. This could increase the risk of misstatements and may result in a modified audit opinion. In a box at the bottom, the Figure shows that any of these scenario may impair the State’s ability to attract investors or cause the State’s borrowing costs to increase. A note at the bottom of the Figure states that the illustration does not include all possible scenarios.