Financial Management: Providing a Foundation for Transition - AGA

5financial accounting and reporting for federalentities like departments, agencies and certainfunds. OMB Circular No. A-136, FinancialReporting Requirements, sets forth the form 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 information the statementspresent. Federal entities that are requiredby the CFO Act to have audited annual financialstatements combine them with reports on programand mission performance; the combinedreport is called the Performance and EvaluationReport (PAR). For a more detailed discussionof technical issues on financial reports, see“Financial 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 opinionsfor their FY 2007 reports).Seventy-two percent of citizens say it is important to receivefederal financial information, but only 5 percent are satisfiedwith what they get.—Association of Government Accountants/ Harris Interactive ®poll, January 2008.Usefulness of financial statementsUnfortunately, few people actually read federalfinancial statements, much less use them formaking 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 financialinformation into a form that will be more transparentto citizens, relevant to decision makersand appropriate for government.Transparent means that information is clear andthat it matters. Ninety percent of American adultssay that, as taxpayers, they are entitled to transparentfinancial management information 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 information, but only 5 percent reportsatisfaction with what they receive.Relevant means delivering information 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 informationin federal financial reports is relevant to