There are several challenges facing someone who wants to know if a city's revenue structure is fair and reasonable. There are few generally accepted standards to use as benchmarks of financial condition, and there is no generally accepted methodology to assess relative financial position. This article reviews literature on financial position and condition, and then develops a methodological approach that creates a cohort of similar cities for benchmarking financial position, and then forming a basis for assessing financial condition. Based on a study of the financial position of a medium-sized city, the article offers lessons for practitioners and scholars.
Government financial reports are often released six months or more after the reporting government's fiscal year-end, and this lag limits usefulness. In a sample of 1,693 Illinois local governments, we examine the determinants of total reporting lag, bifurcating it into two distinct components: (1) audit report lag (ARL), i.e., fiscal year-end to the audit report date, and (2) regulatory reporting lag (RRL), i.e., the audit report date to submission with the State of Illinois Office of the Comptroller. These governments are required to provide regulatory filings in both PDF format and as digital financial information within 180 days of fiscal year-end. We find that prior year ARL is the biggest determinant of current year ARL and that audit firm expertise is associated with shorter ARL. In contrast, audit firm expertise is associated with longer RRL, as is slack, i.e., the number of days left in the 180-day reporting window, suggesting that balancing the demands of multiple government clients is a factor in filing time. Given recent developments in government reporting taxonomies, XBRL is well positioned as a tool to eliminate the RRL by automating the post-audit process, resulting in the timelier release of information in a consumable format to external users.
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