Responsibility, Accountability, and Disclosure

The need for better accountability and financial reporting extends to all levels of government--Federal, State, and local. At the Federal level, the extensive use of deficit financing and the increase in pension and other liabilities have accentuated the need for the Government to provide overall financial reports that clearly show Congress and the public the major aspects of its financial position and operations. Additional overall financial statements are needed to assist decisionmakers in fiscal and economic policy matters. Supplementary reports need to be prepared to assure that any consolidated financial statements are not more misleading than helpful. This family of financial reports might include statements on contingent liabilities, debt maturity, Federal employee retirement systems, long-term projections of the flow of funds, subsidies, tax expenditures, and statutory retirement or survivor benefit programs. The development and publication of Federal consolidated financial statements, prepared on an accrual basis, will aid the earlier identification of financial problems so that remedial action can be taken before the crisis stage is reached, and will help decisionmakers recognize the effect of their decisions on future fiscal flexibility. The Federal Government should set an example for State and local governments by demonstrating the need for and value of improved financial reporting.