Financial statements are quite important in terms informing the external organizational or business stakeholders regarding the status of the organization financially. Financial statements normally reveal to the external stakeholders the manner in which the organization runs its financial resources. It is factual that the financiers of an organization are the people who are in great need of knowing the way it uses its money. They must understand how their finances are put into use. If these resources are properly used, it gives the morale of continuing with their financial support to the organization (Marlowe & Portillo, 2006). For the case of Local Governments within a given community, it is important to consider informing their primary financiers who are the citizens within the community. Since citizens usually pay taxes, it is only prudent and necessary to inform them how their money is managed by governmental officers. Therefore, local citizens rightly deserve to be given the financial statements by the Local Governments.
It is true that in many cases local citizens may not be in a position to understand the content of financial statements. In fact, most of them are not educated well enough to have the financial literacy required to understand the typical terms and phrases used in these statements. However, through different programs geared towards enlightening locals on the proper and comprehensive use of financial statements, the problem can be solved effectively. It does not justify the argument that average citizens should not be allowed to view the Local Government financial statements. They can be made to understand the complexity of local government operations. It is quite encouraging to see the community become high vigilant regarding the management of public funds by becoming increasingly vocal in demanding for rights to view financial statements of local governments. Truly, these local citizens must understand the way revenues are spent in their community.
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How information and financial statements should be presented to the local citizens
The presentation of financial statement information to the public in a given community matters in terms of fostering understanding. Therefore, it is important for the local government accountants to limit themselves to the application of easy to use terminologies while presenting financial information (Piotrowski & Van Ryzin, 2007). Moreover, it is also significant that explanations of the figures indicated o the statements be included for purpose of local citizens’ consumption. In fact, including a key terms section on the financial statement reports where complex terms are defined is quite helpful to the course of ensuring that the community members are able to understand financial information.
In other cases, the community government websites use layman language while reporting financial information to the local citizens. Moreover, the local community websites sampled also indicate that the financial statement information is followed with explanations for the citizens. These are some of the significant practices noted on the local community websites visited. They include the Miami Local Community, New York City Local Community and Houston Local Community.
How you feel citizens could be educated
Citizens may be educated on financial information use through the outreach programs within the community. These are the financial literacy outreach programs. They have to be organized by the local government financial officers. They entail free classes to the locals with the main subject being financial literacy. Through financial literacy programs, many local citizens will gain the understanding of the statements.
After gaining financial literacy, local citizens may then be involved in the process of decision making. The local citizens can be involved in decision making by consulting their views regarding the projects of priority where expenditure should be directed (Ebdon, 2002). Conducting public hearings on the projects for expenditure is important.
References
Ebdon, C. (2002). Beyond the public hearing: Citizen participation in the local government budget process. Journal of Public Budgeting, Accounting & Financial Management , 14 (2), 273.
Marlowe, J., & Portillo, S. (2006). Citizen engagement in local budgeting: Does diversity pay dividends?. Public Performance & Management Review , 30 (2), 179-202.
Piotrowski, S. J., & Van Ryzin, G. G. (2007). Citizen attitudes toward transparency in local government. The American Review of Public Administration , 37 (3), 306-323.
