What should the letter of transmittal ideally communicate?

The letter of transmittal in a Comprehensive Annual Financial Report (CAFR) serves as a formal introduction to the report itself. It provides an opportunity for the preparers to outline the purpose and significance of the CAFR, contextualizing the financial information within the broader goals and operations of the government entity. This letter typically highlights key aspects such as the principles guiding the report's preparation, any significant events that impacted financial performance during the reporting period, as well as acknowledgments of contributions from various departments or individuals involved in the report's preparation.

This introduction sets the tone for the information presented in the CAFR and helps guide the reader through the subsequent detailed financial statements and disclosures. It serves not only as a courtesy but also enhances the transparency and understanding of the financial data being presented.

Other options focus on specific areas such as accounting compliance, strategic government plans, or financial performance, which, while important, do not capture the primary purpose of the letter of transmittal. The letter itself is not intended to be a detailed report on any of those areas but rather a concise introductory document that provides context for the financial statements that follow.