Governmental accounting: Recent developments and current issues

References

• Governmental Accounting, Auditing and Financial Reporting . 1980 . Municipal Finance officers Association 4 Chicago
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• Bowsher , Charles A. 1983 . GAO and the Accounting Profession . GAO Review , : 36 Spring
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• Bowsher, Ibid: 37.
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• Bowsher, op cit: 36.
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• February 16 1981 . “ Report of the Governmental Accounting Standards Board Organization Committee ” . February 16 , For further explanation of numerous sources of state and local governments, Exposure Drafthereby referred to as GASBOC Report
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• Thai , Khi V. 1983 . “ Governmental Accounting ” . In Handbook on Public Budgeting and Financial Management , Edited by: Rabin , Jack and Lynch , Thomas D. 317 – 44 . New York : Marcel Dekker . For the early history of governmental accounting, Chapter 9
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• Bowsher . op cit , 36
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• General Accounting Office . Status, Progress, and Problems in Federal Agency Accounting During Fiscal Year 1980 .
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• In governmental accounting the use of fund as a fiscal and accounting entity with a self-balancing set of accounts has led to complicated financial reporting which shows the financial conditions of various funds of a governmental unit. As this type of financial reporting system does not show the overall financial conditions of a governmental unit as a whole, there have been suggestions for consolidating separate fund reports into a consolidated financial statement. In the form of consolidated financial statements, no financial conditions of fund, but the composite picture financial affairs of a governmental unit, are presented.
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• Accrual basis of accounting is used to record transactions when they are recognized, regardless of the timing related to cash flows. Recording transactions when cash changes hands is called cash basis. There is a major difference in these two bases of accounting: a transaction does not change the assets, liability or fund balance of a fund when it is recorded on a cash basis, but it does have impacts on the assets, liability or fund balance of a fund when it is recorded on an accrual basis. For example, office supplies at $2,000.00 are delivered but not paid. On the accrual basis, the delivery of office supplies should be recorded as follows: Expenditures 2,000 Vouchers Payable 2,000 In other words, there is an increase of $2,000 in the fund liability. If the cash basis of accounting is used, there is no change in fund conditions yet; that is, no record is made yet.
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• The First Hoover Commission was established by President Truman in 1947 to examine ways to improve government efficiency. Among recommendations in its 1949 report were the use of performance budget, and the need for reliable accounting systems.
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• Acturial basis of accounting is used in computing the amount of contributions to be made periodically to a fund or account so that the total contributions plus the compounded earnings thereon will equal the required payments to be made out of the fund. Depending on the personnel policy of each governmental unit, the amount of contributions may be based on the length of time over which each contribution is to be held and the rate of return compounded on such contribution over its life.
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• Lodal , Jan M. 1977 . Improving Local Information Systems . Governmental Accountants Journal , 26 : 18 – 29 . For detailed discussion of this status
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• Lynn , Edward S. and Freeman , Robert J. 1983 . Fund Accounting: Theory and Practice , second , 609 Englewood CLiffs, New Jersey : Prentice-Hall, Inc. .
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• Reny , Robert . 1979 . Model Finance and Accounting Proceeding . 1979 , Orono, Maine. University of Maine .
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• 1985 . Public Budgeting & Finance , 5 : 100 – 106 . For a list of governmental accounting books published in the first half of the 1980's, spring
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• GASB Report , 1 op cit.
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• Financial Accounting Foundation . 1984 . Annual Report 1984 .
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• 1984 . GASB Action Report , September for detailed information on those subjects
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• Governmental accounting systems are organized and operated on a fund basis. A fund is defined as a fiscal and accounting entity with a self-balancing set of accounts recording cash and other financial resources, together with all related liabilities and residual equities or balances, and changes therein, which are seggregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations. In state and local governmental accounting, there are eight funds which are grouped in three fund types as follows: - Governmental funds including general fund, special revenue funds, capital projects funds, debt service funds, and special assessment funds; - Proprietary funds consisting of enterpise funds, and internal service funds; and - Juduciary funds - consisting of trust and agency funds For definitions of funds and fund types, see NCGA's Governmental Accounting, Auditing, and Financial Reporting (Chicago: MFOA, 1980) p. 9. Due to this structure of funds, a basic issue is whether financial aspects of a governmental unit should be reported 31-1 individual or each fund, fund types, or should they be consolidated. Consolidated data would present the overall picture of financial conditions of a governmental unit as a whole. Illustrations 1, 2 and 3 show the difference between statements of individual fund, fund type and consolidated reporting.
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• Lynn and Freeman . op cit. , 607
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• Robbins , Walter A. , Apostalou , Nicholas G. and Strawser , Robert H. 1985 . Municipal Annual Reports and the Information Needs of Investors . Journal of Accounting, Auditing & Finance , 8 : 288 Summer
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• Lynn and Freeman . op cit. , 593
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• Lynn and Freeman . op cit. , 594 – 96 . For further discussion of these criteria, and Engstrom, John H. “The Governmental Reporting Entity”, Journal of Accounting, Auditing & Finance, 8 (Summer 1985)
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• There are two kinds of trust and agency funds: expandable trust and agency funds whose resources, including both principal and earnings, may be expended; and non-expendable trust funds whose principal may not be expended.
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• 1984 . GASB Action Report , September : 4
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• Lynn and Freeman . op cit. , 600 – 604 . For further discussion of basis of accounting and measurement objectives, Klansy, Edward M. and Williams, James M. “Tracking Current Governmental Accounting”. Journal of Accounting (July 1982); and Holder, Williams W. “Expenditure and Liability Recognition in Government”. Journal of Accounting (September 1983)
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• Lynn and Freeman . op cit. , 352
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