Analysis of Financial Reports

Financial Reports

Department of Agriculture publishes a financial report that outlines in detail the work that the agency does. The total document for 2014 amounted to 300 pages. The mandate for the report is to provide "high level performance information to the President, the Congress and to the American people" (p.4).

The first section of the report consists of the overview of the organization, its mission statement, vision statement, organizational chart and other introductory information that should put the report into context. The USDA is organized by mission areas, such as farm and forest agricultural services; food, nutrition and consumer services; natural resources and environment, and other areas. Within each mission area, there might be multiple separate operational units. There is also a section of the report that highlights the key strategic mission areas.

Much of the report is dedicated to the financial information. The information is structured in a top down fashion, beginning with the percentage breakdown of outlays for each mission area. The largest budgetary area is food, nutrition and consumer services. Farm and forest agricultural services, and rural development, are two other major areas of spending outlay. The report also notes that the total budget outlay for FY14 is 8% lower than for FY13. Specific areas where the decrease was targeted are also noted. For example, risk management agency was hit with the most significant spending cuts, largely in the area of crop insurance. There is also a section on the balance sheet. As with the outlays section prior, the format is more of a discussion format with simple aggregate numbers and a lot of visuals, making this information appropriate for all stakeholders.

The report contains other sections as well. One of these is a discussion on managerial controls. There is a summary of material weaknesses, which illustrates that the organization has looked for weaknesses so that it can develop a plan to address these weaknesses in the coming fiscal year. This is one of the elements of the report that indicates a fairly high level of transparency and accountability in the management of public organizations.

The second major section of the report is the financial information. There is a statement from the auditors, showing that the reports have been subject to audit, which should increase public confidence in the material contained within the report. The entire audit report is included. The financial data is presented first with a balance sheet, highlighting the assets and liabilities. There is a difference between these amounts, which is considered to be the agency's "net position." "

A consolidated statement of net cost is provided, which shows the cost of different programs, less the revenues that they have generated. This information is presented here in aggregate form, not including individual line items for the different programs. As with any set of financial statements, there are several notes, where more in-depth explanations of the amounts found in the statements are explained. This includes a discussion about whatever different debts the agency has, and other obligations for the coming year. For each mission area, a list of specific programs is provided. The notes provide substantial detail and context to the financial statements, and are an essential component of this report. There is even a section that breaks down the performance by strategic area. So for example, the organization has as one of its missions "to assist rural communities to create prosperity so they are self-sustaining" and net program costs are attributed to the mission and to the program, because some missions are met by using multiple different programs. Congress and the President can better evaluate mission performance with the use of such breakdowns.