Academic journal article The Journal of Government Financial Management

POPULAR FINANCIAL REPORTS: Tools for Transparency, Accountability and Citizen Engagement

Academic journal article The Journal of Government Financial Management

POPULAR FINANCIAL REPORTS: Tools for Transparency, Accountability and Citizen Engagement

Article excerpt

Most governments issue annual financial reports; in the U.S, state and local governments issue the Comprehensive Annual Financial Report (CAFR), or its equivalent. However, these reports have been found to be neither readily accessible nor particularly informative to non-financial experts such as the general public. For example, in a 2012 report on e-Reporting, the Association of Government Accountants (AGA) noted that, "Typical government financial statements are too large and complicated for average citizens."1 In response, professional associations such as AGA, the Governmental Accounting Standards Board (GASB), and the Government Financial Officers Association (GFOA), have promoted the use of different types of popular financial reports (PFRs) as an alternative reporting mechanism. For example, AGA encourages the issuance of citizen-centric reports, and the GFOA promotes the use of popular annual financial reports.2 These organizations also provide guidelines and best practices for the development of these types of popular reports.

We suggest that the PFR, as a reporting mechanism targeted at the general public, can be an important government reporting mechanism for improving transparency of government budgetary and financial information, contributing to effective public participation through ensuring an informed citizenry, and enhancing government's accountability to citizens. We provide a broad overview of the role of popular financial reporting in this regard by presenting findings of surveys of state and local governments. We discuss (1) the use of different types of PFRs by governments; (2) the motivations for using PFRs; (3) the governmentwide approach to developing PFRs; and (4) challenges of using PFRs.


According to GASB, financial reporting plays a critical role as a tool for public accountability in a democratic society. Yet, various statistics point to citizens' general distrust of and dissatisfaction with financial reporting and the information provided by their governments. Surveys conducted by AGA have found that the majority of citizens believe that government needs to be responsible for providing financial and accounting information, but that government, at all levels, have failed to be transparent.3 AGA surveys also found high levels of dissatisfaction among citizens regarding the financial information they receive from their governments. In general, AGA's surveys point to a gap between what citizens want to know and what their governments are providing. It is not surprising, then, that Carol Lewis and Bartley Hildreth point out in their book Budgeting Politics and Power; that there is general belief among the public that government transparency "fails to meet their needs."4

This perceived lack of transparency comes at a time when there is also general lack of trust in government. The American National Election Studies (ANES) project found high percentages of Americans believe that government wastes a lot of tax money, and is not responsive to the public.5 In a similar vein, there has been a decline in the average score of the trust in government index.6 As shown in Figure 1, results of the ANES surveys show declining trends across the board in terms of measures of citizen trust, and government responsiveness and waste. The combination of these forces has resulted in a greater push for accountability.

Greater pressure for accountability has, in turn, raised awareness of the need to engage the public. Citizen engagement efforts can serve to educate citizens on policy issues or problems, generate greater citizen support of government, build public trust, and enhance perceptions of government performance and accountability.7


PFRs are financial reports prepared by governments to convey financial and performance information to a target audience typically consisting of citizens, businesses and community groups who want general information regarding the government's finances, with the explicit goal of increasing accountability. …

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