GovernmentExecutive.com

A new survey of government finance executives in the United States and Canada shows widespread concern about the ability of agencies to accurately track spending and provide useful data to citizens.

"Governments in Canada and the United States are in a 'perfect storm' of economic recession, budget shortfalls and growing demands for public service," the survey noted. Both governments have implemented spending plans to stimulate their economies and are requiring agencies to provide greater transparency into how those funds are used.

The survey of 324 executives was conducted by the Association of Government Accountants and Grant Thornton LLP, along with the National Association of State Auditors, Comptrollers and Treasurers, and the Financial Management Institute of Canada. Thirty-two percent of respondents were from federal agencies; 54 percent were from state agencies. To encourage participants to speak freely, they were granted anonymity.

The survey shows that new financial reporting requirements imposed in the United States by the 2009 American Recovery and Reinvestment Act clearly have rattled state financial executives and have implications for federal agencies ultimately responsible for reporting how the $787 billion in stimulus funds are spent during the next two years.

As one state financial executive put it, "ARRA is a potential disaster for us. The reporting requirements [to the federal government] are not clear at all, and we are getting so much money with such a short period to spend it that we are at risk of significant fines and penalties down the road."

The new requirements also are coming at a time when falling revenues in many states are forcing them to lay off or furlough employees, some of whom perform the administrative functions necessary to track Recovery Act funds. "That's a huge concern," said Jeanette Franzel, managing director for financial management and assurance at the Government Accountability Office, in a recent interview with Government Executive. Congress has tasked GAO with monitoring how states manage stimulus spending.

"I think every state has mentioned [furloughs] as an issue," Franzel said. "It's a huge risk."

Survey respondents had differing ideas about what transparency even means. Some felt that all spending data that does not jeopardize security should be disclosed to the public. Others saw tremendous problems in "dumping data" without providing the context necessary to understand what the information actually means. One respondent said releasing raw data "may cause program managers to perceive biases toward or against their program, whether such biases are real or not."

Despite the fears, some executives found a silver lining in the new reporting requirements. According to one U.S. survey respondent: "With transparency, we have this great experiment called 'Where's the money going?' and money is the [chief financial officer's] story. This gives us an opportunity to evaluate our reporting model against citizen demand for information. It is also an opportunity for us to show our value."