Financial managers spend too much time complying with regulations and too little time helping manage costs and performance, according to a new report.
Not only are managers not getting enough meaningful performance information, financial reporting is harmed, said the report by the Association of Government Accountants and accounting firm Grant Thornton.
“One near-future possibility is the implosion of the federal financial function, resulting in a surge of disclaimer opinion on annual financial statement reports,” according to James Brimson, the author of the paper released Monday.
He suggests a new model that provides managers information needed for making sound business decisions: process-based accounting and management. Process-based accounting directly links financial data to performance data.
The key to process-based accounting is XML technology, which allows auditors to extract information from computer transactions to measure quality and quantity of work, the report said. Agencies should use their collective buying power to influence commercial off-the-shelf vendors to install XML capabilities in all new releases and upgrades, the report said.
AGA recommends agencies determine common standards for reports, increase the use of XML technology and launch a few case studies to test the new reporting system.
-M.Z. Hemmingway, FederalTimes.com
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