Is it true that a primary government can participate in the Certificate Program without including its component units in its CAFR, as long as disclosure is provided?

The correct position is that a primary government must include its component units in its Comprehensive Annual Financial Report (CAFR) as part of the financial reporting requirements. This inclusion is necessary to give stakeholders a complete and accurate representation of the government's financial position and results of operations, as the component units are part of the primary government's financial accountability.

By not including component units, the CAFR would not provide a full picture of the financial environment in which the primary government operates, potentially misleading users who rely on the report for making informed decisions. While disclosure of component units might provide some level of information, it is insufficient to meet the comprehensive reporting requirements prescribed by accounting standards. Thus, participation in the Certificate Program necessitates full transparency, including the financial activities of component units within the CAFR.