Academic journal article The Journal of Government Financial Management

Financial Reporting in a Dynamic, Digital World: An Overview of AGA's 2010 Executive Session

Academic journal article The Journal of Government Financial Management

Financial Reporting in a Dynamic, Digital World: An Overview of AGA's 2010 Executive Session

Article excerpt

Passage of the American Recovery and Reinvestment Act of 2009 (Recovery Act) greatly accelerated the speed with which government financial information is reported. It altered the dynamic among levels of government and made unaudited financial information directly available to the public online. The last 18 months have ushered in what AGA Executive Director Relmond Van Daniker, DBA, CPA, calls an "absolute and dramatic change in government transparency."

This article summarizes an AGA Executive Session that assessed the benefits and pitfalls of the new transparency initiatives. The session was conducted on July 11, 2010 at AGA's 2010 Professional Development Conference & Exposition in Orlando, FL. A follow-up session is scheduled for this year's PDC, July 10-13 in Atlanta, GA.

The 2010 session explored whether government financial reporting is meeting the needs of the public and governments. When huge outlays are being expended relatively quickly, the public is increasingly interested in how government funds are being spent and the performance of those funds. It is more important than ever for financial professionals to determine whether the public is receiving the information it wants, whether unverified information can be provided with speed and accuracy, and whether the information helps government officials make educated decisions.

More than 90 financial professionals from federal, state and local governments and AGA's Corporate Partner Program participated in the invitation-only session, sponsored by AGA Corporate Partner Ernst & Young. This paper captures discussion during the Executive Session and makes recommendations for improving government financial reporting and transparency.

Speakers were Van Daniker, Danny Werfel, controller, Office of Management and Budget, Richard Skinner, inspector general, U.S. Department of Homeland Security, and John Radford, CGFM, Oregon state controller. Participants in three breakout sessions explored questions about recent transparency initiatives and options to improve the information made available. (See Appendix A.)

Attendees were optimistic about developing a reporting framework that could accomplish several things at once. By leveraging technology and applying various reporting techniques, governments could present disaggregated data in a useful format as well as standardized reports that meet the needs of a vast majority of users while illustrating how governments are interconnected. The challenge comes in anticipating the demands of users of financial information, ensuring the data is reliable and eliminating the need for ad hoc reporting.

Part I: Summary of Opening Comments

Three years ago, the majority of federal agencies crossed the finish line established by the Chief Financial Officers Act of 1990 by issuing audited financial statements in a timely manner. However, audited financial statements largely go unread by the public. According to Werfel, "The federal government met the milestone set by the CFO Act for basic accrual and financial statement reporting, yet the reports are not being read. They didn't hit with the full force we expected. Something misfired on expectations for the CFO Act."

Executive Session participants agreed that there is a gap between what the public wants to know and what governments are producing. Werfel said that the public has begun demanding more data on payments. They want to know where their money is going and what impact it is having. They want to know whether the government is managing their money effectively.

The Recovery Act required that recipient data, not federal data, be published on Recovery.gov. However, the federal government was criticized for incompleteness or other problems with recipient data. When the information was posted on Recovery.gov, the public was keenly interested in job impact, the integrity of the payments and in the level of fraud and waste. …

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