Opening Statement from First Hearing of the Government Reform Subcommittee Chaired by Platts

I would like to welcome our Members and witnesses to the Subcommittee’s first hearing of the 112th Congress.  I’m glad to be working with Chairman Towns again.

This hearing will look at ways to make financial information—particularly the financial information that is reported in agency financial statements and the Consolidated Financial Report—more useful.  We’re all familiar with budget numbers, but the information we are discussing today is different.  While budget numbers are reported using a cash basis, the numbers in the financial reports are reported on an accrual basis.  The difference is that accrual accounting takes time into consideration.  Cash-based accounting would tell a potential homeowner they could afford a monthly payment—accrual accounting would help them realize that a balloon payment is looming or an interest rate is too high. Both are important, but we tend to focus much more on the budget than the financial report.

The question we are asking today by holding this hearing is how we can make the information in the financial report more meaningful to Congress and more useful and accessible to the American people.  I applaud the Federal Accounting Standards Advisory Board for taking the first step and convening the task force to look at the federal financial reporting model. We are pleased to have three task force members here today.

Mr. Tom Allen is the Chairman of FASAB.  I understand this is the first time that FASAB has been asked to testify before Congress. Mr. Jonathan Breul, welcome back.  The Subcommittee has benefitted from your expertise many occasions, and we’re interested in hearing your thoughts surrounding performance information and how to make the link to financial information.  Mr. Mike Hettinger, it’s good to see you on that side of the witness table.  For those of you who do not know, Mike was my Subcommittee Staff Director a few years back.  He has a long history as a Congressional staffer and will provide a look at the task force recommendations through that lens. 

As we speak, the Government Accountability Office is releasing its biennial High-Risk List.  Many of the issues identified by GAO have to do with sound financial management. Though this may seem dry, it is an incredibly important topic.  Nothing is more important than being effective stewards of taxpayer dollars—particularly in times of increasing deficits. 

This hearing sets the stage for our agenda over the next two years.  It will also provide the Subcommittee with an opportunity to develop some questions for the panelists at our next hearing, which will look at the report that was the focus of the FASAB task force—the Consolidated Financial Report of the U.S. Government.  That hearing is scheduled for March 9th, and we are fortunate that GAO, Treasury and OMB have all agreed to testify.  With that, I would like to recognize Ed Towns for the purposes of making an opening statement.