Jeffrey C. Steinhoff, CGFM, a member of AGA’s Northern Virginia and Washington, D.C. Chapters, retired earlier this year after 40 years of government service. His most recent position was managing director, Financial Management and Assurance, U.S. Government Accountability Office (GAO). He is an AGA Past National President and is known in the Association as the “father” of the Certified Government Financial Manager (CGFM) Program.
Is It Time to Reevaluate the Role of the Federal Balance Sheet?
AGA has been at the forefront in advocating simplicity in governmental reporting at all levels. A number of state and local governments have been experimenting with Citizen-Centric Reporting, and earlier this year the U.S. Department of the Treasury issued The Federal Government’s Financial Health: A Citizen’s Guide to the 2007 Financial Report of the United States Government, a nine-page summary presented in a user-friendly format. Further experimentation will continue as Citizen-Centric Reporting evolves and gains greater acceptance. I applaud these efforts and strongly support AGA’s continued leadership as a catalyst to move this initiative forward.
On a track parallel with the evolution of Citizen-Centric Reporting, there is also a need to reevaluate the broader content of federal financial statements and, in particular, the role of the balance sheet. The Federal Accounting Standards Advisory Board (FASAB) is now addressing the treatment of social insurance on the balance sheet, and I am confident that its ongoing deliberations will result in the right decision. FASAB’s earlier creation of the Statement of Social Insurance shines light on what are arguably the most important numbers on the federal government’s financial statements and represents a major achievement in developing useful financial statements unique to government. Building on this work, it is time to ask fundamental questions about the role of the balance sheet since it can never really capture the full range of the federal government’s assets and liabilities. Once we have decided on the role of the balance sheet, we could consider alternatives to the current financial reporting model that would ensure that all federal financial reporting objectives are met in a more useful way.