Accounting Group Pushing 'Citizen-Centric' Financial Reports

Posted 08/27/07
by  Andrew Ackerman
The Bond Buyer

Each year, Saco, Maine, publishes voluminous 100-plus page reports on its finances, including an operating budget, performance measurement report, and comprehensive annual financial report.

But few of the city’s 18,000 residents read these statements, and knowledge of Saco’s finances is limited despite the rivers of ink devoted to them, said finance director Lisa Parker.

“Realistically, the average citizen is not going to read hundreds and hundreds of pages of reports,” Parker said.

To make the financial information more accessible, the town helped develop one of the first prototypes of a four-page “citizen-centric” report that summarizes the information in all three financial reports and directs residents to the town’s Web page, www.sacomaine.org, where they can “drill down and learn more about the stuff they’re interested in,” Parker said.

“It’s kind of a catalyst to increase citizen awareness of this type of information that we have in government,” she said.

As the Securities and Exchange Commission chairman Christopher Cox pushes Congress to consider writing legislation that would make municipal disclosure more like corporate disclosure, supporters of the citizen-centric model say it could serve as an effective way to boost disclosure without creating legislative reporting requirements that issuers view as burdensome.

“Rather than argue over legislation, let’s focus on positive things like this,” said Relmond Van Daniker, the executive director of the Association of Government Accountants, which is spearheading the project. “Even if chairman Cox is correct, moving his [muni initiatives] through the legislative process will make this a big donnybrook, and I wouldn’t want to see that.”

The citizen-centric reports would replace complex “telephone book-type” statements and boil them down to more concise, timely, and more easily understood documents, added Van Daniker, who is former executive director of the National Association of State Auditors, Comptrollers and Treasurers.

In addition to Saco, other volunteers on the project include Portland, Ore., Maricopa County, Ariz., as well as Oregon and the District of Columbia. Van Daniker said he is in talks with additional states that are interested in participating, as well as some Pacific Rim territories. Oregon completed its citizen-centric report before its CAFR for its most recent fiscal year, Van Daniker said.

Each of the reports follows the same template. The first page includes an overview of the state or locality, page two cites the previous fiscal year’s performance, while page three reviews revenues and expenditures. Page four provides an economic outlook and lists future challenges. In Saco’s case, page four includes a review of the future objectives of the City Council in 2007 and 2008, as well as of resident polls of the city’s overall image of itself and its levels of growth.

Van Daniker said the SEC should promote the voluntary citizen-centric reports. A commission spokesman declined to comment on the idea for the reports.

Van Daniker said he also supports Cox’s call for an independent source of funding for the Governmental Accounting Standards Board. He suggested that GASB could receive some of its funding from Wall Street firms and made clear that he would not support federal legislation on this issue.

“There is a vested interest among all the parties in having a strong GASB, but there is not a strong interest in having legislation,” he said.