Business entities must provide 10-Ks to their shareholders to report income and losses. Why not the federal government? The government does indeed provide an annual 10K to their shareholders – we, the people of the United States, whose taxes fund the government. The annual 10K of the United States is called the Financial Report of the United States, and while it’s a lengthy tome, it’s filled with useful information.
The primary focus of the report is on the government’s spending patterns for the year, but it also provides insights about trends that potentially affect the nation’s future. CPAs play an important role in establishing the policies of their companies, as well as within their communities. Understanding the trends and other information from the federal government can help you predict and respond to potential trends to protect the best interests of your clients and others.
The report contains findings from 150 departments within the Federal government, excluding the Federal Reserve System, which produces reports separately. The U.S. Government Office of Accountability and the Treasury typically release their findings within five months of the conclusion and release of this report.
Within the report, CPAs can find typical accrual-based reporting of financial statements with supporting information as well as nontraditional sustainability financial statement. Traditional accrual reports will seem familiar to most accountants since this is the typical reporting style used by companies. The outlier is the nontraditional reports, which is a unique feature of the federal government’s reporting system. These reports contain information, projections, and a discussion of the program in question.
Balance sheets, financial statements, total spending, and other documents will be very familiar to accountants and easy to understand. Learning the specific language of unique federal documents can be time-consuming, but the government produces an eight-page Citizens Guide along with the document that includes highlights in layman’s language. Although your specialized knowledge and training will help you decipher the 200+ reports in the document, the Citizen’s Guide may come in handy.
Another publication that you may find useful is called What’s at Stake? The CPA Profession on Fiscal Responsibility. This publication also includes information on how the federal document impacts CPAs.
So what might a CPA glean from these lengthy documents? Look for the following information to help you in your quest to manage your organization’s finances:
- Spending trends, either up or down, in departments that impact your organization directly or peripherally.
- Historic and current spending, and how it may affect the overall economy. An economic slowdown will impact your business in one way, improved productivity in another. Trend graphs make this section easy to understand.
- How federal spending may impact the unique industry that your business or organization works in.
CPAs can be the translator for complex federal language to help those within their organizations understand the big picture of national finance. With so much taxpayer money at stake, it pays to be cognizant of federal spending and its impact upon your industry.
Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. Your accounting software is an important component of the changeover from the older 1993 regulations to the new rollout. We can help you with the change and more.
Please contact Welter Consulting at 206-605-3113.