Full-cost accounting

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Revision as of 13:09, 22 August 2012 by Terra (talk | contribs)
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Terra: I can work on this with detail/references. But until we get detailed references, here is my take on the need for "full cost accounting", which I view as both "cash flow detail" AND "balance sheet reporting".

CASH FLOW DETAIL

Full-Cost-Accounting, in the cash-flow sense, IMHO, is to make sure that we (the public) can "drill down" to all and any government expenditure. To the check level. In a format that's easily "managable" and "analyzable". Like Excel files.

Many government people (and legislators that go around saying that we should "trust our people" and not push for this) think that full-cost accounoting is already "done" now. Yes, they are right in the sense that we, you and I, can walk up to any Town Hall or state finance clerk and ask to see the records.

BUT what is missing is both online accounting and "real time" accounting, line item accounting, and check level reporting.

So what we get with this current system are these unbelievably convoluted paper copy or PDF reports that are impossible to decifer. Yes, SOME agencies have gone to Excel. But this is far and few between. AND it's only for some budgets, etc.

This lack of transparency/accessibility is to the advantage of many insiders.

The reports are so far past the point in time that you can actually DO anything about the expenditure or potential expenditure that it takes YEARS to dig through the mess, making it extremely easy for sneaky people to put one past the public.

I have a LOT of experience digging through this type of mess. My collaborators and I have long lists of successes uncovering nonsense that the public was outraged about.

So yes, full cost accounting, but in a way that allows the public to be able to monitor on a real time basis what the heck is going on. I don't mean real time, like every second. But yes, when a check is cashed, that should show up on an excel sheet somewhere, where we can analyze. Yes, the public should be able to see "actuals", as the budget-year progresses, so that we can see where money is "not" being spent...which are opportunities to re-examine budget priorities.

Ideally, and someday, I'd like actual "dashboards", which are super easy to create and modify, to allow online/real analysis by "regular people". Right now, I have to download unbelievably stupid messy Excel sheets IF I CAN GET THEM...or hand load paper copy or PDF info into Excel to be able to analyze stuff. Yes, I end up getting the info that I want. But it's a HUGE struggle and I have to torture people to get what I view as basic budget detail. I have a Masters in Finance, and years of public financial analysis experience. And I have tenacity and the "dangerous" lack of fear when it comes to getting the data. Those skills should NOT be required to get basic info. ANYONE...everyone should have access to the info. I post that kind of info onto my lists, when I do the analysis, but it really should come from the source...our government, our employees...

There is NO EXCUSE. It's cheaper to do it right. I could go on and on about this. the point is that we need this NOW.

BALANCE SHEET REPORTING

A basic financial tool for managing organizations is "the balance sheet". The balance sheet shows "assets" and "liabilities". As one looks over time, and at public policy shifts, the way that assets and liabilities are calculated changes. EACH DECISION that your legislator votes on shifts the balance sheet. YOU HAVE A RIGHT TO KNOW both before and after, how these shifts will and did work.

Assets include everything that the organization considers "financial positives". For example, cash in the bank. Investments. And in the public realm, assets like "the commons"...land, paintings, etc.

Liabilities are "financial obligations". These include everything from future obligations for "existing debt", as well as things unique to the government realm. For example, future obligations for water infrastructure.

Yes, we need to be "efficient" in how we calculate these numbers, because we don't want to weigh down our government to "over report". But I believe this can be done efficiently. Companies do it every day. The Government Financial Officer's Association has experts that know how to do these things. And I can help. The expertise exists to do this right. Voters need to know how the votes impact the dollars. We can't reconcile policy with finances, and thus our environmental/eco-systems, if we don't understand how the shifts are made relative to the voting. Currently, what happens is that we don't see the shifts years after the vote. This is sloppy policy making.

Further, where we DO get balance sheet impacts before the vote, they are NOT reconciled in a holistic fashion. So for example, where a developer proposes a shopping mall. The traffic engineer, paid for by the town planner who wants development (another story), says "no impact" to the traffic situation. BUT that is "FOR THE PROJECT", not including all projects currently on the table or allowed by zoning. Slopping planning. Allowed, encouraged by property/profit-oriented society.