The impact of the great recession on the financial management practices of state and local governments: part I

The Chief Financial Officers Act and subsequent legislation require federal agencies to produce corporate-style financial statements. Arguments for financial statements drew on private sector analogies and suggested policy makers and managers would use the information to make better public policy and management decisions and improve accountability for financial management and program performance. Nearly all major government agencies have unqualified audit opinions and improvements in financial management are claimed. But benefits for policy making and management are not yet well understood. This paper examines the question by comparison with the private sector and by examining what agencies say about the uses and users of financial statement information. The emerging challenge in the evolution of federal financial reporting is to develop better government-specific analytical tools and other financial information for policy makers and managers.