The Benicia Finance Committee will get its first look Thursday at the Comprehensive Annual Financial Report (CAFR), which services as the city’s annual audit.

The committee also will get a guide on such reports from the Governmental Accounting Standards Board (GASB), Benicia Finance Director Karin Schnaider said.

Dean Michael Read has written the guide, “The Quick Guide to Local Government Financial Statements,” which describes the purpose of such financial reports as the CAFR.

In his guide, Read wrote that governments don’t operate like businesses: They don’t charge citizens directly for services, but instead require citizens to pay taxes and fees to underwrite the services.

Reports like CAFRs provide information about a government’s assets — what it owns and controls — as well as its liabilities — what it owes, Read wrote. What may be left over are called net assets.

In addition, the reports provide information about the cost to provide public services as well as how the government’s resources are obtained, what services cover their own costs, what out-of-the-ordinary costs or funding sources have been identified, whether there’s been enough revenue to cover expenses and if the government is continuing to improve or decline fiscally.

Financial statements look at government funds — the General Fund that is the operating fund, special revenue funds, capital projects funds, a debt services fund and legally restricted permanent funds, he wrote.

In addition, reports can cover proprietary funds — enterprise funds and internal services funds — that are treated like business funds; and fiduciary funds, such as employee pensions, investment trusts, private-purpose trusts and agency funds, Read wrote.

Financial reports often contain additional notes that provide important information that further explain a government’s financial status, he wrote.

For comparison, they sometimes contain the originally adopted budget, subsequent modifications and the actual results for the year, as well as information about the government’s pension system, physical condition of infrastructure, as well as whatever other data a local government decides to add.

In addition, the government’s management staff often provides supplemental supporting information in those statements.

Also Thursday, the Finance Committee will develop a recommendation to the City Council about whether the city treasurer should be a voting member of the committee.

Members also will decide whether to recommend acceptance of the GASB 54 Fund Balance Policy, “Fund Balance Reporting and Governmental Fund Type Definitions.”

GASB issued the policy in 2009, and it became effective for fiscal years ending June 30, 2011. However, Benicia hasn’t adopted the policy, even though the city’s financials have been reported in accordance with the statement, Schnaider wrote in her report.

She explained that the policy “establishes fund balance classifications that comprise a hierarchy based primarily on the extent to which a government is bound to observe constraints imposed upon the use of the resources reported in governmental funds.”

It wouldn’t alter the city’s financial position, she wrote.

“The categories are more clearly defined to make the nature and extent of the constraints placed on a government’s fund balance more transparent,” Schnaider wrote.

In other business, the panel will review the city’s November warrant register of expenditures and its own work plan.

The Finance Committee will meet at 9 a.m. Thursday in the Commission Room of City Hall, 250 East L St.