Fall is often described as a frenzied time in Washington, D.C. lore. After racing to spend any leftover appropriations before the start of a new budget calendar, federal number crunchers are now laboring to account for the trillions of dollars that have passed through public treasuries over the previous fiscal year.
When the yearly review is complete, the president, Congress and American people are rewarded with “a comprehensive view of the federal government's finances,” including “position and condition, revenues and costs, assets and liabilities, and other obligations and commitments.” Policymakers are supposed to use these reports when shaping the next year’s financial policies to ensure that the Treasury remains on firm footing.
These financial reports are only useful if the underlying numbers are up to date. Banks send out account summaries each month to help their customers stay on top of household budgets. Corporations publish their quarterly earnings statements within 45 days so that investors have a clear understanding of recent profits and losses. Failure to meet these frequent deadlines could put a financial professional in legal jeopardy.
The federal government, however, operates under glacially paced standards of timeliness when compared to these private sector norms. The Government Financial Officers Association (GFOA) recommends the publication of state and local government reports within 180 days of the fiscal year end. The most recent Treasury report issued by Treasury Secretary Steven Mnuchin met that requirement, but that was long after the president’s State of the Union. Taxpayers had to wait until late March before they could learn about a period of time concluding before the previous Halloween.
Slow government reporting is not unique to the federal level. State treasuries across the country determine their own schedules and sometimes fail to meet even the laxest of standards. A new nationwide analysis found 20 state comptroller offices that failed the GFOA’s 180-day definition of timeliness.
Some of the reports just barely missed the deadline — Louisiana, Rhode Island, South Dakota and Texas each published on the 181st day of the new fiscal year. Still other states required significantly longer to make their data publicly available. Illinois routinely comes in last on a ranking of timeliness: More than 400 days elapsed before officials in the Prairie State published their most recent financial report. The lack of any internal enforcement mechanism means that state officials face no consequences for this behavior.
Timely financial reporting is more than an abstract ideal. Lawmakers need good data to keep the government on a sustainable trajectory. Journalists use the numbers to report on the effects of public policy, and voters rely on it to hold their elected officials accountable.
The speed with which the federal government released its financial report has steadily worsened over recent years, stretching out from 104 days in FY2016, to 138 the next year and 179 days for the most recent report. Meanwhile, state reporting over this same period of time is trending in the opposite direction, steadily improving from an average 204 days to 193. The failure of federal accountants to keep pace with state counterparts is all the more inexplicable because automated financial technology should be making the job easier, not harder.
Mnuchin is one of several current cabinet officials who built a highly profitable career in the private sector. If America’s largest companies can provide their shareholders with timely financial information, why do we hold the U.S. government to a laxer standard? After all, every American taxpayer qualifies an investor in the U.S. government, and we all stand to gain from greater timeliness and transparency.
Sheila Weinberg, CPA, is the founder and chief executive officer of Truth in Accounting, an organization that researches government financial data and promotes transparency for a better-informed citizenry. Follow her on Twitter: @Sheila_Weinberg.