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. Enormous effort, cost, and scrutiny are devoted to producing documents that reside in low-traffic corners of federal websites. Meanwhile, the USAspending.gov portal — where the public can see who is receiving federal funds — attracts far more attention but lacks the same level of assurance and data integrity.
This imbalance must be corrected. If citizens are voting with their clicks, then government financial management must follow. The new OMB direction could be a long-overdue alignment between accuracy and public interest, provided that it ultimately elevates the importance of spending data and outcomes, and that it shifts attention toward the systems and controls that ensure those spending reports are reliable, accurate, and traceable. Citizens and Congress need to be assured that the annual appropriated dollars — everyone’s’ tax dollars — are achieving the intended results.
Improper payments, waste, fraud, and abuse are more corrosive to public trust than a material weakness in how an agency capitalizes equipment. Accountability in government is ultimately judged by whether dollars reach their intended purpose — not by whether agencies meet accounting benchmarks more peculiar to the corporate world.
Under the existing model, agency systems capture information on all transactions to the extent that they are relevant to a traditional general ledger. A new approach would enable these systems to instead capture information on transactions that are relevant to the intent and impact of the funds at the heart of these transactions.
As auditors push for more robust controls, this type of transaction-level reporting and tracking is precisely the kind of modern, citizen-focused oversight our federal financial system needs.
That said, any change of this magnitude must be accompanied by a clear-eyed understanding of the risks. It should not mean lowering the bar on internal controls, compliance, or accounting discipline. The rigor of current federal audit practices — particularly the advances in automated solutions over error-prone manual accounting — must be preserved and strengthened.
Moreover, while simplicity and accessibility are laudable goals, the new memo’s apparent proposal to reduce financial reporting to a single-year snapshot risks obscuring vital trends. Taxpayers deserve to see how their government’s financial performance changes over time, just as they would expect in any responsible public or private organization.
Third, to ensure the legitimacy and enduring value of the new approach, we strongly encourage OMB and the Trump administration to work in close consultation with the Federal Accounting Standards Advisory Board. Aligning this new framework with Generally Accepted Accounting Principles is essential not only for credibility but also for consistency across agencies and across time. This alignment also needs to include the Government Accountability Office and the Inspector General community, both of which are key to this transition.
Ffinally, we cannot stress enough the importance of leadership in this transition. The federal government has been without a confirmed controller for eight years now. For an administration with so much focus on government efficiency, it should a top priority to appoint a controller that can lead agency CFOs in this new, bold direction.
OMB’s memorandum is a major step forward. It recognizes that modern financial reporting must serve the public interest, not simply mirror private sector models. It invites the federal government to focus on what really matters: where the money goes, whether it’s being spent wisely, and how transparently that story is told.
This is a rare opportunity to build a 21st-century financial reporting model that aligns with citizen expectations. Let’s move forward, boldly but wisely.
Danny Werfel was Controller in the Office of Management and Budget from 2009 to 2013 and IRS commissioner from 2023 to 2025. Dave Mader was Controller in the Office of Management and Budget from 2014 to 2017.
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