Local governments spend considerable time and money producing required financial statements, and while managers overwhelmingly perceive a net benefit to these annual reports, most (64 percent of respondents) indicate that these audited statements do not play a significant role in their policy decisions. This is according to a recent study by Northern Illinois University’s (NIU) Center for Governmental Studies, the findings of which have been summarized in an ICMA white paper, “Management’s Perceptions of Annual Financial Reporting.”
To better understand the current state of local government financial reporting, ICMA engaged NIU’s Center for Governmental Studies to explore the perspectives of city, town, and county managers and administrators, as well as finance directors and officials across the U.S. The study examined the impact and stakeholder benefit of the various financial statements issued by the Governmental Accounting Standards Board (GASB) and found that while 80 percent of study respondents have implemented GASB Statements No. 34, 44, 45, and 54; less than a third of them found the statements to be beneficial.
The white paper also looks at whether professional support/outreach mechanisms from entities such as the Governmental Accounting Standards Advisory Council, which provides feedback to GASB, as well as assistance from groups such as the Government Finance Officers Association and audit firms was made available to assist report preparers with understanding and implementing the changes to their year-end financial statements.
Key recommendations of the Management's Perceptions white paper include:
- Reassess content, semantics, and the structure of the annual financial report to clarify the facts needed and reported, and enhance transparency.
- Leverage new technologies to simplify and speed up the generation of annual financial reports, integrate data, improve productivity and increase report timeliness.
- Increase outreach/support efforts between local government management, their associations, and the GASB. Direct conversations between government managers and GASB could help gain consensus and a better understanding of the benefits of new reporting standards.
To learn more about the research and further recommendations, read the newly published white paper: “Management’s Perceptions of Annual Financial Reporting.”
ICMA, the International City/County Management Association, advances professional local government worldwide. The organization’s mission is to create excellence in local governance by developing and fostering professional management to build sustainable communities that improve people’s lives. ICMA provides member support; publications; data and information; peer and results-oriented assistance; and training and professional development to nearly 9,500 appointed city, town, and county leaders and other individuals and organizations throughout the world. The management decisions made by ICMA's members affect millions of individuals living in thousands of communities throughout the world, from small villages and towns to large metropolitan areas.