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Friday, February 18, 2011

Experts push financial reporting overhaul

As the administration and Congress begin the battle of the budget, a task group report suggests the numbers might be even more complicated than most of the country realizes.

"Let's be honest. This is one of the most important, and most boring hearings in Congressional history," Rep. Jim Cooper (D-Tenn.) said during the Oversight and Government Reform Subcommittee on Government Organization, Efficiency and Financial Management's first in a series of hearings on financial reform Wednesday.

The subcommittee heard from three experts about recommendations from the Federal Accounting Standards Advisory Board (FASAB).

"Our focus is to look at financial information of the federal government, particularly how that information is reported and then acted upon," said subcommittee chairman Todd Platts (R-Pa.). "Specifically we are looking at the Consolidated Financial Report (CFR) and how we can make it more useful. The question we are asking is how we take than information and make it more useful, not just to Congress, but to the American people."

Platts said that given the $14 trillion deficit, the public is paying attention to whether Congress is spending tax dollars responsibly - or not.

The task force identified serious problems with the financial information government auditors collect and how they report it. It focused primarily on the CFR, a record of how agencies have spent money and the costs of unfunded but obligated programs such as Medicare.

"The static, paper-based reports the government delivers today contain important information," said Jonathan Breul, a member of the task force and a former Office of Management and Budget official. "However, those reports are not presented or available in a way that makes them easy to use or easy to understand."

The task force conducted a user-needs study which showed citizens, executives and managers in both the private and public sector had difficulty understanding information in federal financial reports.

The task force developed ten recommendations it says will improve the usefulness of the CFR. Four of the recommendations focus on ways to enhance the communication of the data by making it easier to access, search and understand.

FASAB wants to develop a way to link agency financial statements to performance measures to give users a better idea of whether or not the money is being spent wisely. They said numbers lack meaning when there is no context as to whether or not the spending had meaningful results.

Breul said this goal is in line with the recently passed Government Performance and Results Modernization Act. The law calls for OMB to develop governmentwide standards to measure agency performance and identify inefficient programs.

-Meg Beasley, FederalNewsRadio.com

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