HISTORY OF THE FINANCIAL REPORT OF THE UNITED 

STATES GOVERNMENT 

olidates the 

 governmentent of the 

mission, and 

fit Guarantee 

d the United States Postal Service.) Originally born in the private sector, 

the has been published for 

cial 

thur Anderson for the 

reasury 

ow known as 

ced its first 

perts to advise 

 that decade, and 

the 1980s, the report was published every year with a relatively simple 

format. Although today’s regulatory architecture for federal government financial 

uding Arthur 

rce data and 

ief Financial 

ct of 1994 

(GMRA), and as called for by accounting standards developed by the Federal Accounting 

Sta f the Treasury, the 

troller General 

established the 

e preparation of the 

binet-level 

departments and 10 agencies and required audits of their trust funds and business-type 

activities. The GMRA amended the CFOA, by expanding its provisions to require all 

dited financial statements covering all of the agency’s 

activities and accounts. The CFO’s responsibilities include the annual submission of 

audited consolidated statements to OMB, thereby providing “complete, consistent, 

reliable, and timely information”1

 to the public about government activities as well as 

holding the major arms of government accountable for this financial information. 

 

The Financial Report of the United States Government (FR) cons

financial statements of the government’s component entities into a single

wide report. (“Component entities” include departments like the Departm

Treasury, independent agencies such as the Securities and Exchange Com

government corporations or business-type entities such as the Pension Bene

Corporation an

report is now the product of the U.S. Treasury Department and

nearly thirty years. 

The Prototype FR, previously referred to as the Consolidated Finan

Statements (CFS), was initially produced by the accounting firm Ar

1973 and 1974 fiscal years. Under the leadership of then Secretary of the T

William Simon, Treasury’s Bureau of Government Financial Operations (n

the Financial Management Service) assumed responsibility and produ

Prototype FR for FY 1975. Treasury convened a “blue ribbon” panel of ex

regarding the format and content of the report. During the remainder of

throughout 

reporting was not yet in place, Treasury hired private accounting firms, incl

Anderson and Price Waterhouse, to review procedures for collecting sou

documentation. 

The early 1990s witnessed a turning point in the content and format of the FR as a 

result of new regulatory and legislative requirements contained in the Ch

Officers Act of 1990 (CFOA) and the Government Management Reform A

ndards Advisory Board (FASAB, or the Board). The Secretary o

Director of the Office of Management and Budget (OMB), and the Comp

of the United States (who leads the General Accounting Office (GAO)) 

FASAB in 1990 to develop the accounting standards that would guid

financial statements mandated by the CFOA. 

The CFOA created Chief Financial Officers (CFOs) for 14 Ca

major agencies to supply au

1

 CFOA/H.R. 5687 (1990, Section 102b). 
GMRA also instructed that the FR published by the Treasury be audited by the GAO 

beginning in fiscal year 1997, eliminating the report’s “Prototype” status. 

g greater 

of FASAB has 

ng through 

eral reporting 

lops and publishes accounting standards for the government and its 

com goal of providing relevant and reliable federal financial 

oyees with 

nd solicits comments 

uld focus primarily on 

 needs of current and future taxpayers. Agency level financial reports are 

mo to the 

s. 

Accounting 

 the groundwork 

ctives of 

 Performance, Stewardship, and 

Sys the quality of 

cial reports. 

ribe and define 

t provide the foundation for 

Sta t standards 

 regarded as 

nt. (In 1999, 

 FASAB as the 

nt.) 

Most of t t the main sections 

of th FR fairly l government in 

a way that is tran

are: ) Principa as Basic 

Information), (2 ired 

Supplementary Information or RSI), and (3) Other Accompanying Information (OAI). 

• The principal financial statements and related notes present 

information deemed essential to fair presentation of the financial 

position and results of operations of the reporting entity. 

• RSI provides supplementary information deemed essential to 

accompany the principal financial statements and notes. It includes 

Although the CFOA and the GMRA were instrumental in initiatin

efficiency and accountability through financial reporting, the presence 

been and will be a crucial factor. FASAB’s efforts enhance financial reporti

independent development of accounting concepts and standards for fed

entities. FASAB deve

ponent entities with the 

information to all readers. 

FASAB members include private citizens and government empl

relevant expertise. The Board uses an open deliberative process a

on proposed accounting standards. FASAB believes the FR sho

information

re detailed and, thus, may meet the needs of decision makers internal

government as well as taxpayers interested in a specific agency’s program

 

In September 1993, FASAB’s first Statement of Federal Financial 

Concepts (SFFAC 1), “Objectives of Federal Financial Reporting,” laid

for federal accounting standards. The statement outlined the four main obje

financial reporting: Budgetary Integrity, Operating

tems and Control. Moreover, it covered other important issues such as

financial information provided and the needs of readers of federal finan

Since this first statement, FASAB has issued three more SFFACs that desc

the conceptual framework for federal financial accounting. 

SSFACs are useful as general guidance concepts tha

tements of Federal Financial Accounting Standards (SFFAS), which se

(i.e., specific requirements) for financial reporting. These standards are now

generally accepted accounting principles (GAAP) for the federal governme

the American Institute of Certified Public Accountants recognized

standard-setting body, or promulgator of GAAP, for the governme

he 25 SSFASs issued to date have been to ensure tha

e present the financial position and operations of the federa

sparent to readers. The three main sections of a federal financial report 

 (1 l Financial Statements and Related Notes (also known

) Supplemental Financial Information (also known as Requ
the Management Discussion and Analysis (MD&

SFFAS 15 (1999), at the beginning of the FR.MD&

understandable and accessible information abou

A), defined in 

A provides 

t the entity and its 

future. 

• as necessary to 

ncial statements or RSI, but voluntarily presented by 

management of the reporting entity because it is useful for readers 

atus. While Basic 

ubject to limited 

audit procedures, the OAI is unaudited. These sections and their respective audit 

pro ed for private 

 a fourth, 

I). Its 

ate sector (and 

ents), which do not feature this fourth category. The 

RSSI section was created to present forward-looking and/or nonmonetary aspects of the 

Gov ce of heritage 

nge of unique 

net present value 

nce programs) 

ation found in 

 reports, FASAB began issuing standards reclassifying the 

stewardship information in RSSI as Basic, RSI, or OAI. This reclassification process is 

ongoing and is expected ultimately to result in the elimination of the fourth category. 

Thus far, the Board has reclassified RSSI relating to Stewardship Responsibilities by 

issuing SFFAS 25 in July 2003. This standard, which will take effect in 2005, 

reclassifies the SOSI as a basic financial statement, essential to fair presentation, thus 

giving it full audit status. 

operations, service levels, successes, challenges, and 

OAI contains information not mandated by FASAB 

the fina

of the report. 

Ultimately, each section’s importance is reflected in its audit st

Information is subject to a “full audit” (positive assurance) and RSI is s

cedures, set forth by OMB and GAO, are equivalent to those requir

sector financial reports. 

For fiscal years 1997 through 2003, however, the FR has contained

section known as Required Supplementary Stewardship Information (RSS

inclusion has distinguished federal financial reports from those of the priv

those of state and local governm

ernment’s stewardship role, such as ownership of land, maintenan

assets, the financing of investments in the nation’s human capital, and a ra

financial commitments to its citizens. 

The Statement of Social Insurance (SOSI, which provides 

information based on actuarial cash flow projections for five social insura

and accompanying notes have also been reported in the RSSI section. 

 

Beginning in 2003, in deference to the three categories of inform

nonfederal financial