Should government budget reports be more uniform? (with related video)
GPN frequently looks at budget statistics as we compile our Keating Report forecast on government budgets and spending. Penton’s Govalytics, a provider of local government budget and capital planning intelligence, also relies on government budget data. In this Q&A, GPN asks Dan Warn about the need for increased uniformity in government budget reports. Warn is vice president of public sector at BravoSolution. The Chicago-based firm is a procurement solution provider. Here are Dan Warn’s views.
GPN: Do you think that there is a need for increased standardization across governments, such as: uniform fiscal years in local and state government budgets and standard budget definitions? If so, why? What would the benefits be?
Dan Warn: Increased standardization could certainly be an asset. One of the challenges governments of all levels face in today’s economy is how to become more efficient spending taxpayer dollars. Typical accounting and general ledger views of how this money is spent don’t provide a centralized, actionable view of spending. Differing budget definitions across different levels of government exasperates this lack of transparency. Adoption of a standardized spending taxonomy would eliminate these challenges.
Spend taxonomies allow governments to group like goods and services spending into categories of spend, allowing them to identify spending inefficiencies and opportunities to drive cost savings initiatives. Ultimately, this example of standardization drives several important benefits for the government, including transparency into where and how they’re spending their money, and the ability to identify areas to spend money more efficiently – including collaboration opportunities with other government entities. Likely the most important benefit of all: better value for money to the taxpayer.
GPN: Would a standard fiscal year for state and local governments simplify analysis of government spending?
DW: Not necessarily. Modern-day analytics solutions eliminate the need for a standard fiscal year, as spending can be compared and analyzed across multiple time periods, categories of spending, different entities, etc. These solutions allow governments to effectively analyze spending patterns, trends, and opportunities to spend more efficiently.
In addition, this type of spend analysis is an ongoing and dynamic process that governments can use to conduct both long- and short-range budgeting, minimizing the potential of a once-a-year stressful budgeting exercise. One potential benefit of a standard fiscal year could be in increased collaboration among different government entities. If multiple governments, enabled by ongoing and dynamic spend analysis and analytics, shared fiscal years, it would be easier for them to collaborate on joint opportunities to leverage their spending. This could help drive increased cost savings and value for money to the taxpayer.
GPN: How can BravoSolution help?
DW: Our firm has assisted government entities in solving the challenge of creating transparency into their spending, identifying opportunities to spend more efficiently, and driving better value for the taxpayer dollar. It starts with creating a standard spend categorization, transforming budget and accounting data into actionable data ready for analysis, and then being able to apply tools and techniques to take advantage of identified opportunities.
The company’s procurement technology platform and practitioner experience has helped more than 600 organizations and 65,000 purchasing professionals in 70 countries unlock the power of procurement to drive financial performance, manage risk, and influence innovation.
In the video, Peter Smith discusses how to measure the performance, savings and effectiveness of the procurement department in organizations.