Which financial document is crucial for long-term financial planning?

The Comprehensive Annual Financial Report (CAFR) is essential for long-term financial planning because it provides a complete and detailed overview of a government entity's financial status, including its assets, liabilities, revenues, and expenditures. This document offers critical insights into the financial health of the entity over an extended period, which aids in strategic decision-making and forecasting future financial performance.

The CAFR includes not just basic financial statements, but also a management discussion and analysis section that highlights trends, issues, and other significant factors affecting financial decisions. This broader context is vital for understanding the sustainability and viability of financial strategies over the long term.

Other financial documents like a cash flow statement, while useful for assessing liquidity and immediate cash management concerns, don't provide the breadth of information necessary for long-term planning. The annual report might summarize financial performance but often lacks the comprehensive detail found in a CAFR. Meanwhile, a short-term budget is primarily focused on the immediate operational needs and does not reflect long-term fiscal health or strategies. Thus, the CAFR stands out as the most critical document for long-term financial planning.