In March 2011, the Governmental Accounting Standards Board (GASB) issued a research brief titled “The Timeliness of Financial Reporting by State and Local Governments Compared with the Needs of Users.” This study formally exposed an apparent gap between the time-of-issuance of governmental financial reports and their usefulness according to a large and diverse group of survey participants. According to the GASB in the aforementioned report, nearly a quarter of the government entities take longer than six months to issue their annual reports, with many evidencing release times of a year or more. Comparatively, the users surveyed indicated that report usefulness begins to decline substantially when the time to issuance exceeds 45-60 days. After six months the information is no longer considered timely and is significantly less useful to users of the financial statements, which include creditors and investors, such as banks and bondholders, respectively. Timeliness is one of the six qualitative characteristics that governmental financial reporting is expected to possess, and it is currently not being met. First, one of the key reasons timeliness is impaired is directly correlated with the relative complexity of GASB Standards; consequently, there is a need for a qualified management staff whom is specifically trained to interpret and implement GASB standards. Second, a lack of adequate internal controls leads to lack of communication and an overall inefficient reporting process. The governments, regardless of their size, should post relevant information within a timely manner, which is commonly benchmarked at six months. Thirdly, complex data gathered from consultants is difficult for staff to interpret. Finally, turnover of management is an inherent problem associated with this study. We believe this timing issue may be reduced by introducing better internal controls, information technology, and training of relevant staff, increased communication, and improved overall commitment by the government to issue these reports in a timely manner.
Seyam, Achraf; Hinners, Alexander; Freire, Lauren; and Parbat, Victor, "The Timeliness of State and Local Governments by GASB: An Evaluation of Efficacy of Financial Reports" (2016). CUNY Academic Works.