Financial Management: Providing a Foundation for Transition - AGA
Financial Management: Providing a Foundation for Transition - AGA
Financial Management: Providing a Foundation for Transition - AGA
- No tags were found...
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
5financial accounting and reporting <strong>for</strong> federalentities like departments, agencies and certainfunds. OMB Circular No. A-136, <strong>Financial</strong>Reporting Requirements, sets <strong>for</strong>th the <strong>for</strong>m andcontent of the financial statements in the reports.The annual report also includes an independentauditor’s opinion of the reliability of the processesused to develop the in<strong>for</strong>mation the statementspresent. Federal entities that are requiredby the CFO Act to have audited annual financialstatements combine them with reports on programand mission per<strong>for</strong>mance; the combinedreport is called the Per<strong>for</strong>mance and EvaluationReport (PAR). For a more detailed discussionof technical issues on financial reports, see“<strong>Financial</strong> statements and audits: a closer look”on page 24.For 17 years, the CFO Act helped buildfederal financial management’s ability andcapacity. Audits have become tougheryear after year, but today auditors givemost CFO Act entities unqualifiedor clean opinions on their annualfinancial reports (19 of 24 CFOAct entities received clean opinions<strong>for</strong> their FY 2007 reports).Seventy-two percent of citizens say it is important to receivefederal financial in<strong>for</strong>mation, but only 5 percent are satisfiedwith what they get.—Association of Government Accountants/ Harris Interactive ®poll, January 2008.Usefulness of financial statementsUn<strong>for</strong>tunately, few people actually read federalfinancial statements, much less use them <strong>for</strong>making decisions. Referring to the good recordof clean audit opinions on these statements, anexecutive says, “We are getting A’s on our testsbut not learning anything.” Most of the CFOsand financial executives in our survey agree.They think that the story of the CFO Act doesnot have to end with financial reporting. Instead,say many, it is time to evolve federal financialin<strong>for</strong>mation into a <strong>for</strong>m that will be more transparentto citizens, relevant to decision makersand appropriate <strong>for</strong> government.Transparent means that in<strong>for</strong>mation is clear andthat it matters. Ninety percent of American adultssay that, as taxpayers, they are entitled to transparentfinancial management in<strong>for</strong>mation fromall levels of government, according to a January2008 Harris Interactive ® poll commissioned bythe Association of Government Accountants.Seventy-two percent of the citizen surveyed saythat it is important to receive federal governmentfinancial in<strong>for</strong>mation, but only 5 percent reportsatisfaction with what they receive.Relevant means delivering in<strong>for</strong>mation that isimportant to taxpayers, legislators, an administration’stop leaders, policy makers, executivesand managers. Almost all 120 executives inour survey say that very little of the in<strong>for</strong>mationin federal financial reports is relevant to