Which two major components must the annual financial report include?

• A. Adoption-related income from all sources, including the source and amount, and adoption-related agency expenses, including the expense category and category detail.
• B. Only adoption-related income and expenses.
• C. Budget forecast for the next fiscal year.
• D. List of adopted children.

Answer: (A)

Adoption-finance reporting requires transparent disclosure of both income sources and expense details. The report must include adoption-related income from all sources, with the source identified and the amount shown, and it must include adoption-related agency expenses, with each expense categorized and given detail. This level of detail ensures accountability, traceability, and regulatory compliance by showing exactly where funds come from and how they are spent.

The other options don’t fit because a budget forecast for the next year is a planning document, not part of the current-year financial report’s income/expense disclosure; a list of adopted children is not financial information; and reporting only income and expenses without the required source, amount, and category detail would omit essential transparency.