Accounting and Financial Reporting
Mandating Specific Technologies for Financial Reporting and Disclosure Purposes
The Government Finance Officers Association (GFOA) has long encouraged governments to demonstrate accountability and transparency by making financial information of the highest quality readily accessible to citizens and other interested parties. GFOA is aware of the developing technological advances toward the development of standardized financial information. However, GFOA is also aware of efforts to mandate the use of specific technologies for the purpose of reconciling and reporting financial information. Such a mandate imposes significant burdens on state and local governments including:
- Unfunded mandate. Implementing a specific technology for the purposes of financial reporting would convey significant cost to state and local governments, including the costs required to equip the local governments with the technology, to train the employees of the local government in order to effectively use the new technology and to protect the information housed in the new technology. Additionally, due to the iterative nature of new technologies, they will also carry a high likelihood of continued maintenance or updates.
- No viable taxonomy. While numerous small-scale efforts have been made to develop a taxonomy that incorporates necessary elements of GASB GAAP financial statements, there currently exists no viable taxonomy. The very substantial differences between the private sector and government make existing private sector taxonomies substantially unusable. Moreover, the vast differences in structure and operations among and between general purpose and special purpose governmental entities makes the creation of a single, uniform taxonomy especially challenging. Efforts to limit the development of a taxonomy to only selected elements of financial statements will mean that only incomplete data – rather than the level of detail deemed necessary for GAAP reporting -- will be available.
GFOA opposes efforts to mandate the use of specific technologies by state and local governments for financial reporting and disclosure.
- Publication date: September 2018