For Danny Werfel, controller of the Office of Management and Budget, the evidence is clear: average citizens are simply not interested in the typical agency financial statement. And the anniversary of the statute that made those financials possible in the first place offers an opportunity to make those reports more relevant to citizens and leaders alike.
“One of the things that we’re learning today is that our traditional financial reports are not meeting user needs,” he told the recent meeting of the American Institute of Certified Public Accountants (AICPA) National Governmental Accounting and Auditing Update Conference. “Neither the public, nor the government decision-makers appear to be looking at our standard reports, such as our balance sheets or our net operating costs.”
In his keynote address, Werfel reviewed the history of the Chief Financial Officer’s (CFO) Act. He says that over the years, the act mandated that agencies have corporate-style CFOs, responsible for financial reports that provided a better picture of the agency’s fiscal health. In recent years, technology made it possible for more and more agencies to achieve clean audit opinions, the highest rating possible for financial statements demonstrating a high degree of accuracy.
But Werfel said the stimulus bill changed citizen expectations regarding agency financials.
“The Recovery Act exposed a gap between the public’s demand for financial information, and the capacity of the CFO Act-based accounting systems and infrastructure to produce it,” he said.
Werfel said the many transparency requirements of the Recovery Act, designed to track the spending of such a large sum of money, spawned highly popular websites such as Recovery.gov, from the Recovery Accountability and Transparency Board.
It also improved USAspending.gov, which offers information about federal contracts. He said the high traffic on these sites and the relatively low traffic to traditional agency financial statements is proof that citizens are demanding more data and information on federal spending.
Jeanette Franzel, managing director of Financial Management and Assurance at the Government Accountability Office, said she understands Werfel’s insight into the newly discovered citizen demand for spending information. As one of GAO’s top accountants, Franzel works closely with Werfel and OMB and says it’s all a matter of using technology effectively.
“Currently, there is a lot of real time reporting happening on federal websites regarding spending data,” she told Federal News Radio. “And we still have the annual financial statements which are audited, and provide a good annual accountability mechanism. So the real trick is taking all of the different venues of financial information and financial reporting, and figuring out the best combination while still achieving accountability and auditability and assurance.”
Change may be on the way for agency financial statements for another reason – Congress mandated a review. Werfel said the recently enacted Improper Payments Bill mandates a comprehensive, top-to-bottom review of the CFO Act financial reporting model, to see if it still fits the needs of citizens and decision makers who may be more interested in spending data, rather than neat, comprehensive balance sheets.
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