Arizona has the 19th-best fiscal transparency reporting of the 50 U.S. states according to an annual analysis by the nonprofit Truth in Accounting (TIA).
The new study on state fiscal transparency concludes that 32 states earned distinction for providing the public “with candid and transparent information about their government’s fiscal health;” 46 states earned clean audit opinions in the most recent analysis.
Arizona received a grade of 84 out of 100, with each state being scored according to eight criteria: accessibility, searchability, if the states used an outside auditor, the auditor’s opinion, timeliness of the report, percentage of off-balance sheet liabilities, pension data timing, and deferred items.
“Arizona scores relatively well on Truth in Accounting's transparency analysis,” Bill Bergman, TIA’s director of research, told The Center Square. “But the state still has room for improvement. For example, it is among the slower states to deliver its audited annual financial report, and a practice of relying on dated pension valuation dates that don't align with the fiscal year tends to muddy the waters.”
The second annual analysis, Financial Transparency Score Report, focuses on the Comprehensive Annual Financial Reports on file in statehouses across the country. It compares their filings with widely accepted best practices from the private sector.
“State governments have historically struggled to provide the public with meaningful information about their financial health,” TIA founder and CEO Sheila Weinberg said in a statement. “We have seen reporting efforts hampered in the past by conflicts of interest, out of date information, and slow publication. This year’s analysis highlights several states with performance that has run counter to those negative stereotypes.”
In order to earn a score of 100, TIA outlines what states must accomplish. They would need to have their financial information easily accessible online, with basic search and hyperlink functionality; be audited by an independent auditor who is not an employee of the government; receive a clean opinion from an independent auditor; be published within 100 days of the government’s fiscal year ending; report all retirement liabilities on its balance sheet; contain a net pension liability measured on the same date as the CAFR; and include a net position not distorted by misleading and confusing deferred items.
TIA’s analysis of Arizona’s financial condition found that it improved by 41 percent from the previous fiscal year. Arizona and other states have become more transparent over the last few years, thanks to the Generally Accepted Accounting Principles (GAAP) set by the Governmental Accounting Standards Board (GASB), which now requires governments to disclose pension (GASB 68) and other post-employment (GASB 75) benefits on their balance sheets, the report states.