Objectives Of Governmental Accounting And Financial Reporting

Governmental Accounting

In the context of governmental accounting and reporting, the control environment has a direct impact on an entity’s ability to collect and present accurate financial information. Thus, the internal control environment and related procedures are key areas of concern to an entity’s external auditor. WARREN RUPPEL, CPA, is the author of four Wiley accounting publications, including Wiley GAAP for Governments. He is a partner in the Nonprofit and Government Services Group of Marks Paneth & Shron LLP in New York. He began his career at KPMG in 1979 and joined Deloitte & Touche in 1989 to specialize in audits of not-for-profit organizations and governments. Mr. Ruppel has served as the chief financial officer of an international not-for-profit organization and as the Assistant Comptroller for Accounting of The City of New York, where he was responsible for all aspects of the City’s accounting and financial reporting.

  • Importantly, the GASAC doesn’t vote on board matters or make decisions about standards.
  • SAM chapter 8300 Budgetary Accounting provides detailed information on the role and importance of budgets, encumbrances, and tracking expenditures.
  • The concept of major fund reporting is introduced and defined by GASB Statement 34 to simplify the presentation of fund information and to focus attention on the major activities of the entity.
  • For example, if warehouse requisitions can be issued through a computer terminal, access to inventory may be gained through the system.
  • Taxes and fees are the principal sources of revenue and taxpayers are involuntary resource providers.
  • The GASB believes that laws requiring balanced budgets prevent the current generation of citizens from shifting the burden of paying for current-year services to future-year taxpayers – namely, our children and grandchildren.

Issued in late 2010, the scope of GASB 62 includes more than 30 reporting areas, such as leases, contingencies, the capitalization of interest costs, and more. Get started today byrequesting a demo, and feel free toreach out if you have any questions. Government budgets are subject to change regularly with partisan influence, which means your funding may be inconsistent.

Other Common Gasb Statements

Government accountants are employed at all levels of government – federal, state and local. At the federal level, government accountants manage public funds, investigate white-collar crime, perform financial statement audits for government agencies and conduct research on emerging accounting issues.

Certain governmental entities may use external service organizations for executing and recording certain transactions, such as payroll processing. In such situations, the entity needs to ensure that the service organization has adequate controls over processing the transactions. Controls over authorized access to assets are important to an organization, not only to prevent thefts, but also to ensure that assets are committed only after proper consideration by individuals who are knowledgeable and experienced.

Among the most important types of communication is the annual financial report, which presents the financial position, operating results, and cash flows for a particular accounting period. All governments, including school districts, develop their annual financial reports in accordance with principles established by standard-setting authorities to provide consistency and comparability for users. This multi-day school is designed to familiarize participants with accounting and financial reporting requirements for local governments in New York. The course provides guidance on certain operational issues, such as cash management, purchasing, processing claims for payment, accounting for capital projects and utilizing reserve funds. However, with respect to licensed public accountants, the “practice of public accounting” shall not include attest or auditing services or the rendering of an opinion attesting to the reliability of any representation embracing financial information.

The financial demands of government fund accounting require close attention to detail and a reliable organizational process. The CPA Journal is a publication of the New York State Society of CPAs, and is internationally recognized as an outstanding, technical-refereed publication for accounting practitioners, educators, and other financial professionals all over the globe. Edited by CPAs for CPAs, it aims to provide accounting and other financial professionals with the information and analysis they need to succeed in today’s business environment. The ACFE’s Global Salary Studyfound that CFEs earn a 34% income premium over their peers without the credential, which demonstrates the value employers place on the credential. The study also provides valuable information and comparisons helpful to all anti-fraud professionals in benchmarking their compensation levels and career growth. The training, fraud resources and continuing education provided by the Association of Certified Fraud Examiners will help in any stage of your career path.


Government accounting is discussed with regard to financial reporting by various levels of government. Steps have been taken at the Federal level to strengthen and integrate financial accountability. The Department of the Treasury has an ongoing project to publish consolidated financial statements for the Federal Government on an accrual basis. Continued reforms of Federal budgeting and congressional oversight and evaluation include improvements in the reporting on policy and program costs and performance. Many Government organizations that are reimbursed for the services or products they provide follow commercial accounting practices.

Governmental Accounting

Examples of these procedures include the reconciliation of physical inventory to accounting records and the preparation of a bank reconciliation. Persons who monitor the performance of control procedures are held accountable by senior management, the governing board, or the audit committee. The substance of internal controls is more important than the form because of the risk that controls may not be effectively implemented or maintained. Additionally, practices that are widely recognized and prevalent in state and local government are included in this category. Category consists of GASB Technical Bulletins and AICPA Industry Audit and Accounting Guides and Statements of Position that have been specifically made applicable to state and local governments by the AICPA and approved by the GASB. Enhance the understandability and usefulness of the annual financial reports to users of these reports to enable them to make more informed economic, social, and political decisions. GASB Chair Joel Black provides an update on quarterly activities as well as his reflections on Board activities and priorities.


However, Statement 34 permits a government to designate a particular fund that is of interest to users as a major fund and to individually present its information in the basic financial statements, even if it does not meet the criteria. However, a government does not have the option to NOT report a fund as major if it meets the criteria above. For governmental entities to ensure the proper segregation of resources and to maintain proper accountability, an entity’s accounting system should be organized and operated on a fund basis. Each fund is a separate fiscal entity and is established to conduct specific activities and objectives in accordance with statutes, laws, regulations, and restrictions or for specific purposes. Governmental accounting maintains tight control over resources, while also compartmentalizing activities into different funds in order to clarify how resources are being directed at various programs. This approach to accounting is used by all types of government entities, including federal, state, county, municipal, and special-purpose entities.

In addition, school-level financial information is often related to non-financial information (e.g., student achievement) in published reports and is used for comparison purposes. As a result, school districts must increasingly focus on ensuring that financial information reported by schools is accurate and consistent across the district. Permanent funds are required to be used to report resources that are legally restricted to the extent that only earnings may be used for purposes that support the reporting government programs. To clarify the difference between these concepts, the basis of accounting governs when transactions will be recorded, while the measurement focus governs what transactions will be recorded. Independent Certified Public Accountant means a person duly registered in good standing and entitled to practice as a certified public accountant under the laws of the place of his residence or principal office and who is in fact independent. In determining whether an accountant is independent with respect to a particular person, appropriate consideration should be given to all relationships between the accountant and that person or any affiliate thereof.

  • State and local governments will have increased flexibility to pursue a wider range of uses under the State and Local Fiscal Recovery Funds program.
  • While there are some similarities between Federal accounting principles and those of State and local government, whether or not they should be the same is questionable.
  • In the final analysis, maintaining the internal control environment and related control procedures is an integral part of management’s responsibilities.
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  • However, the addition of Principles and Points of Focus dramatically change the practical implementation and application of COSO in all organizations; not just SEC filers.
  • Most school districts receive state aid on the basis of average daily membership , average daily attendance , or a similar pupil count method.
  • GASB and FASB are boards that set high-quality accounting and financing standards.

Rebecca Meyer, CPA, CGMA, is President of RAM CPA, PLLC located in Raleigh, NC and is a seasoned CPA and management accountant with more than 22 years of technical finance and leadership expertise in various aspects of attest, accounting and compliance services. Her firm specializes in collaborating with state and local governments, nonprofit organizations, small businesses, regulators, and other CPA firms to provide high quality audit, attest, accounting, finance, and compliance services. Generally Accepted Accounting Principles (“GAAP”), Generally Accepted Auditing Standards (“GAAS”), Generally Accepted Government Auditing Standards (“GAGAS”), Uniform Guidance, ERISA and others. In this role, she assisted in remediation and education of members to improve the overall quality of professional services performed in the industry. She serves on the AICPA’s Technical Standards Subcommittee as well as the Government Accounting and Auditing Committee and the Nonprofit Accounting and Auditing Committee of the North Carolina Association of CPAs. The focus of governmental funds is on current financial resources, which means assets that can be converted into cash and liabilities that will be paid for with that cash. Stated differently, the balance sheets of governmental funds do not include long-term assets or any assets that will not be converted into cash in order to settle current liabilities.

What Is The Difference Between Gasb And Fasb?

Under GASB 87, such substitution rights have no impact on the determination of control. Under GASB 87, an “exchange or exchange-like transaction” is required to determine if a contract contains a lease, whereas ASC 842 language states an “exchange for consideration” must occur. A commitment to academic excellence and professional success is the foundation of each of our programs. The College System of Tennessee is the state’s largest public higher education system, with more than 140 community college and colleges of applied technology teaching locations and the online TN eCampus.

When it comes to governmental accounting, it’s vital to comply with GASB policies. This practice ensures your organization satisfies the community’s wants and needs, and it can help you receive more funding in the long term. Within communities, GASB compliance ensures constituents are satisfied with the way their money is spent. When the public is pleased with fund allocation, they continue to fund these government programs, which then goes back into community improvement. GASB regulations represent the best way to keep government organizations effective. Governments and private businesses operate in vastly different environments, so their accounting processes and reporting are substantially different, too. Online courses in The University of Georgia’s Governmental Accounting Series will help you gain a foundational understanding of accounting in a governmental environment.

Gasb 62

It went into effect for reporting periods starting after December 15, 2019, and clarified ambiguities in the previous guidance. Prior to the issuance of GASB 84, no guidance for differentiating fiduciary activities existed, including fiduciary component units, leading to inconsistent interpretation and application. Scheduled to be effective for fiscal years beginning after June 15, 2022, GASB 96 requires organizations to recognize a subscription liability and a subscription asset https://www.bookstime.com/ at the commencement of the subscription term of the SBITA. The subscription term begins when the government entity obtains control of the right to use the underlying IT asset. Some of the accounting rules under GASB 94 and GASB 87 are almost identical including discount rates, measurement of contract length, analysis of modifications/terminations. Underlying accounting mechanics are similar for the initial and subsequent measurement of liability and right-of-use assets.

Governmental Accounting

It will familiarize participants with the purpose and use of fund accounting, the three fund categories, the different measurement focuses and bases of accounting used in government financial statements, and the fund and government-wide financial statements. Government accounting standards apply to federal entities as well as state and local entities. Federal agencies report under the Federal Accounting Standards Advisory Board, or FASAB, the body that regulates generally accepted accounting principles for the federal government. GASB on the other hand, provides accounting guidance for local and state government agencies.

Financial Reporting Model Reexamination

The Government Accounting Standards Board is an independent, non-political organization founded in 1984. The board’s mission is to promote clear, consistent, transparent, and comparable financial reporting for state and local governments—the Federal Accounting Standards Advisory Board does the same for the federal government. Taxpayers, holders of municipal bonds, legislators, and oversight bodies rely on this financial information to shape public policy and invest. Bruce W. Chase, professor of accounting, is in his twenty-fifth year of service at Radford University. He is also the Director of the University’s Governmental and Nonprofit Assistance Center .

The chair serves on the board full-time, while the vice-chair and the remaining five members serve the board on a part-time basis. GASB members are qualified in Governmental Accounting and finance and are concerned with public interests in the nation’s accounting and financial reporting.

However, commercial accounting would not serve the nonbusiness areas of the Government. Considerable differences exist between the accounting principles applicable to State and local governments and those applicable to industry. While there are some similarities between Federal accounting principles and those of State and local government, whether or not they should be the same is questionable. State governments have the sovereign right to set their own accounting standards, and most State governments have assigned specific responsibility for this task to a particular State official. Similarities in principles applicable to various sectors would facilitate comparisons. Although setting standards for State and local accounting is important, compliance with the standards is also important. The Federal Government is increasingly concerned with the financial reporting of State and local governments because it relies on their accounting systems to provide information on how Federal grant and revenue-sharing funds are spent.

Thus, this type of control typically involves authorization or approval of transactions at specific dollar thresholds and manual (e.g., requiring signatures of authorized individuals) or automated (e.g., password protected) authorizations for computer transactions. The effectiveness of these procedures often depends on general computer controls over information security. The online course is self paced and allows students the flexibility to take the course based on their schedule. You can print the slides in advance for reference and making notes while taking the class.

Treasury Rule Provides Flexibility For State And Local Government Pandemic Aid

New tools offered by the AICPA Governmental Audit Quality Center discuss coronavirus relief fund audit requirements for for-profit health care entities as well as single audit tips for auditors and organizations subject to single audit requirements. The GASB is also advised by the Governmental Accounting Standards Advisory Council , an organization that was established by the FAF’s Board of Trustees to advise the GASB on its agenda, priorities and procedural matters. Importantly, the GASAC doesn’t vote on board matters or make decisions about standards. Instead, it provides the GASB with contextual information about the diverse individuals that GASB may impact.

Actuarial Standards Board means the board established by the American Academy of Actuaries to develop and promulgate standards of actuarial practice. Ballotpedia features 341,055 encyclopedic articles written and curated by our professional staff of editors, writers, and researchers. Click here to contact us for media inquiries, and please donate here to support our continued expansion.