For more than 30 years, U.S. government agencies have published corporate-style financial statements with relatively little change in their look and feel. In what now could be considered a long-overdue move, the Office of Management and Budget has issued a new memorandum that signals a decisive and strategic evolution in how the federal government approaches financial reporting and audits.

As two former Controllers of OMB, each confirmed by the U.S. Senate and steeped in decades of public financial management, we welcome this bold direction — but with a few important caveats.

For far too long, the federal financial reporting model has hewed too closely to the private sector’s framework — one primarily designed for investors, creditors, and markets. While reliability, accuracy, and accountability are fundamental in any financial reporting system, the reality is that the public sector serves a different set of stakeholders: citizens. Citizens care about how their tax dollars are spent, not necessarily about how federal agencies depreciate assets on a balance sheet.

This is why we view OMB’s memo not as a retreat from rigor but as a recalibration — an attempt to bring financial reporting closer to the heart of what matters to the public: transparency, stewardship, and trust.

Take federal agency financial statements.........

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