Linking our Statistical Reporting System with the Financial Statements Published by the Federal or State Governments

By: Jesse Hughes, Ph.D., CGFM, CPA, CIA, International Consultant; Professor Emeritus of Accounting, Old Dominion University 

In the United States, is there any effort to link our statistical reporting system with the financial statements published by the federal or state governments?

In 1993, the United Nations (UN) updated the System of National Accounts (SNA) to provide for full accrual financial statements with fixed assets reported on the fair value basis. The intent was to provide better analytical measures for fiscal policy. In 2001, the International Monetary Fund issued the Government Finance Statistics (GFS) Manual to provide detailed procedures for implementation of the desired SNA by the UN. These procedures identified the procedures for preparation of four financial statements: Statement of Government Operations, Balance Sheet, Statement of Sources and Uses of Cash and Statement of Other Economic Flows. The following footnote in the GFS Manual identifies the linkage anticipated with the accounting system: “Although the GFS system is described in standard accounting terms, it is important to remember that it is a statistical reporting system that might differ in important ways from the underlying financial accounting system from which most of the GFS statistics will be derived.”

The International Public Sector Accounting Standards provide a standard for reporting on the General Government Sector that would provide such a linkage. Many developed and under-developed countries around the world have made or are in the process of making the linkage between the desired statistical reporting system and the underlying financial accounting system. Yet, I am not aware of such an effort in the United States. We prepare a set of financial statements but I do not see the linkage to our statistical reporting system. The financial statements for the government are subject to audit but the financial statements for the statistical systems are not. Have I missed something or do we want two different sets of financial statements: one for statistical reporting and another for financial reporting? If these are not linked and they report on the same thing (even if the fixed assets are measured differently), doesn’t this create confusion among the readers of the financial statements?

 

Comments

[realestate]

Nice comment Richard I am very pleased with your thought and does not like to add anything to it.
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John Assam

[Jesse Hughes]

Richard,
Thanks for providing the info about the comparisons being made with the NIPA. Perrhaps someday we will be able to make such a comparison with the FASAB statements since both are supposed to be on the accrual basis. I remember when we discussed this at a FASAB Board meeting about 15 years ago but not much has happened since then. Maybe good ideas just take time??

[Richard Fontenrose]

The CBO published a paper comparing the National Income and Product Accounts (NIPA) to the budget accounts (Comparing Budget and Accounting Measures of the Federal Government's Fiscal Condition, Dec 2006), and the FASAB/accrual accounts have been compared to the budget accounts. But NIPA and the FASAB accounts have yet to be compared. The media uses the GDP and other measures derived from the NIPA everyday to communicate with the public. But it's highly unlikely that the public really understands how these accounts relate to familiar accrual notions. The recent IPSASB's efforts in these regard are commendable. More is sorely needed.