Over the course of the last couple of years, the Government Finance Officers Association (GFOA) has engaged in a couple of major initiatives including Rethinking Budget and Rethinking Revenue. 

A May report from GFOA  builds a powerful case for yet another major GFOA undertaking, “Rethinking Financial Reporting.”

The GFOA makes a strong case for the importance of this new venture based on a 2019 survey which found that:

• “Whether or not the government received a clean audit receives almost unanimous interest (95%) from elected boards

• The fund balance, as described in the governmental funds balance sheet, was of interest for 62% of elected boards. 

• Nothing else received interest from more than 50% of boards, but compliance with the adopted budget was close, with general interest from just under 50% of boards. 

• Of the nine remaining elements of reporting that our survey respondents were asked about, we found that, on average, 20% of boards were interested in those elements. 

The upshot, according to the report: "If most elected officials don’t read and/or can’t understand financial reports, it is likely a safe bet that financial reports are not widely read or understood by the public. Furthermore, financial reports may not actually report what the public wants to know.”

As Sharon Edmundson, director of municipal finance programs at the North Carolina League of Municipalities told us at the GFOA conference last week, “Financial reports have grown longer and more complicated over time. And quite honestly, they’re not as usable as they used to be for a lot of folks who use financial reports in some way or another. I think they are struggling to find what they need in their reports.”

With all this in mind, it’s not a surprise that in a survey of GFOA members who prepare financial reports, 55% expressed positive views of the value of financial reporting while 45% expressed neutral or negative views.

These sentiments, the report states are leading the GFOA to seek answers to a number of important questions in this initiative including:

• Can we streamline regulations? 

• Can we eliminate regulations?

• Can we repurpose regulations?

• Can we align requirements from different regulatory and quasi-regulatory bodies? 

• What information is of greatest value to bond buyers? 

The GFOA will be hosting a webinar to take viewers through more details on July 15 at 2:00 PM (ET). To register, click here.

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