What is the primary purpose of the introductory section of the CAFR?

The introductory section of the Comprehensive Annual Financial Report (CAFR) serves a critical role in providing stakeholders with essential context about the financial information presented in the report. Its primary purpose is to introduce the financial statements along with important non-financial information that helps users understand the entity's financial condition and performance within a broader context.

This section typically includes a letter of transmittal, organizational structure, and a discussion of the economic environment affecting the reporting entity, among other elements. By doing this, it sets the stage for the financial statements that follow, allowing users to comprehend the significance of the data and the rationale behind the numbers.

While financial data and audit findings are indeed integral parts of the CAFR, they are predominantly found in later sections of the report, such as the financial section for quantitative data and the auditor's report for audit findings. Compliance with federal regulations is also important; however, it is a broader objective that encompasses more than just the introductory section. Thus, the introduction's emphasis on context and guidance makes it essential for users to correctly interpret the financial statements and evaluate the entity's overall performance and financial standing.