A Century of Governmental Accounting and Financial Reporting Leadership

By Freeman, Robert J.; Allison, Gregory S. | Government Finance Review, April 2006 | Go to article overview
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A Century of Governmental Accounting and Financial Reporting Leadership


Freeman, Robert J., Allison, Gregory S., Government Finance Review


For 100 years, the Government Finance Officers Association has been a leader in promoting sound accounting and financial reporting practices by state and local governments. In fact, it was this very same objective that led to the association's creation in February 1906. "To have uniform accounting so that the Government and State officials can promptly make their reports ... would be a step in the right direction," said President Samuel B. Williams in his address at the first annual conference later that year.1 While GFOA has extended its reach into other areas of government financial management, it has retained its leadership role in accounting and financial reporting to this day.

This article focuses on the various roles GFOA has played during its first 100 years in advancing accounting and financial reporting practices in state and local government. First, we recount the development of the "generally accepted accounting principles" standards-setting process and how the association played a pivotal role in its evolution. We then focus on other key initiatives that have provided (and continue to provide) governmental accounting and financial reporting leadership to the thousands of GFOA members throughout the United States and Canada.

STANDARD SETTING

The 1890s and early 1900s were tumultuous years in local government This period was plagued by graft and corruption, fiscal mismanagement and crises, and creative accounting and financial reporting. A leadership vacuum was clearly evident.

The Formative Years. The National Association of Comptrollers and Accounting Officers - eventually to become the Government Finance Officers Association of the United States and Canada - was formed in 1906. Its founding members pledged to seek improved methods of public finance and hoped to eventually achieve uniformity in governmental accounting and financial reporting. From its inception, the association's primary focus was improving governmental accounting and financial reporting. Indeed, the name of the association's professional journal, The Comptroller, implied a focus on government accounting and financial reporting.

The National Association of Comptrollers and Accounting Officers held national conferences annually and otherwise sought to fulfill its mission. However, progress was slowed in the early years by the fact that the association was a part-time volunteer organization with no full-time staff members. Moreover, several years of concentrated activity to improve governmental accounting and financial reporting were interrupted first by World War I and then by the Roaring '20s and the Great Depression of the 1930s.

The ravages of the Great Depression on public sector finances as well as on personal fortunes provided the impetus for full-time association staff members and renewed emphasis on improving governmental accounting and financial reporting. Several landmark events occurred during the 1930s:

* The association's journal, The Comptroller, was renamed Municipal Finance (1933).

* The association was renamed the Municipal Finance Officers Association of the United States and Canada (1932).

* Carl H. Chatters, an eminent governmental accountant, university comptroller, professor, and textbook author became the first executive director of MFOA (1933).

* The National Committee on Governmental Accounting was established (1934).

The National Committee(s) on Municipal (Governmental) Accounting (1934-1974). The MFOA took on the heavy financial and management responsibilities of sponsoring the organization that developed the first national standards of state and local governmental accounting and financial reporting. Amidst the Great Depression, it created the National Committee on Municipal Accounting. MFOA asked the leaders of 10 other national organizations interested in improving governmental accounting and financial reporting to establish an advisory committee to the NCMA and to appoint a member to serve on the NCMA Board.

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