In May, 1977, the Revenue Resources and Economic Commission established a Subcommittee on Local Fiscal Reporting. The need for such a committee had become apparent as legislative committees and commissions and local government organizations sought to analyze the financial picture of local govern­ments, both individually and collectively, in an effort to de­termine the financial needs of Virginia's localities. These groups were hampered by the lack of uniform data currently ex­isting at the state level related co local revenues and expen­ditures. The Auditor of Public Accounts presently publishes two reports annually--Comparative Cost of County Government and Comparative Cost of City Government, These are helpful documents, but users are aware of several limitations. The reports, when first established, were developed to meet some­what different purposes than is now the case. For example, there is a need to make comparisons between all cities and counties. The present structure of reporting allows for lim­ited comparisons between cities or counties, but no between both types of local governments. The reports present data in such a way that it is difficult to separate real differences in spending and revenue effort from differences due to variations in accounting and reporting practices.

The Subcommittee on Local Fiscal Reporting has undertaken to modify and expand the reporting system now used by the Auditor of Public Accounts. In developing concepts and reporting procedures, the Subcommittee has worked closely with the Auditor of Public Accounts, 26 representative local governments, local government organizations, private CPA firms which perform governmental auditing, and the Government's Division of the Bureau of the Census. The Subcommittee is greatly appreciative of comments and suggestions it has received from these sources. The success of this project is contingent upon the continuation of their valuable assistance.

The requirements of financial reporting are dependent upon the general objectives to be made of the information which is to be collected and the key users of the data. The following pages outline the Subcommittee's view of the concepts of uniform local fiscal reporting and the purposes which it feels such reporting should meet. Some of the key procedures of a reporting system are addressed as well as a recommendation of the appropriate structure for the local report forms.

This document serves as an interim report of the Subcommittee. It is intended to set forth the basic premises on which recommendations are made £or the development of a local reporting system at the state level. The Subcommittee recommends that such a system be retained in the Office of the Auditor of Public Accounts. It is important to recognize, however, that the reporting system being recommended by this Subcommittee is an expansion of the program which is presently the responsibility of the Auditor of Public Accounts, and as such may require an additional appropriation of state funds.

The Subcommittee plans to continue its work and develop the concepts embodied in this report into the specifics of a uniform local report form and reporting system.