Learn something new every day
More Info... by email
Federal financial management usually represents a system that helps govern the finances in a government. Large governments may prepare documents as a reference tool for agencies to follow when handling funds. In some cases, the government may set up an accounting office that employs numerous accountants and financial analysts in order to create these guidelines. This agency is often outside of the control of other government agencies in order to prevent undue influence for federal financial management. Therefore, the reference tools created may not even be enforceable under law, limiting the control this agency has in the government.
All government agencies typically receive funds, which normally come from appropriations set aside from tax revenues. Each government group or agency needs to govern its finances in a standard accounting fashion. The federal financial management agency presents guidelines for these basic tasks in order to ensure each agency observes best practices. Accountants in each agency review the guidelines and often follow them as best they can. In some cases, the guidelines may not apply to all agencies due to the size or amount of appropriations received.
A few standard accounting practices are always in federal financial management guidelines sent to government agencies. The most common activities covered include accounts payable and receivable, payroll, travel reimbursement, and budget creation and execution. Again, the government’s financial agency usually has numerous accountants employed who tend to have numerous years of experience and accounting certifications. The recommendations made in documents passed around other government agencies cover all the necessary financial tasks to properly manage funds. Audits may occur in federal agencies, which demand the use of standard guidelines to manage funds.
Government agencies may also release financial documents to the general public. This activity allows the general public to review how efficiently each agency spends its appropriated tax funds. Again, federal financial management guidelines may have rules or practices for the preparation and release of financial documents. The two most common statements released include a balance sheet and statement of funds used. As government agencies do not concern themselves with generating profits, only the appropriated funds and their use are of importance on financial statements.
Open and transparent governments are those that best use federal financial management practices. Agencies concerned with the approval of its citizens tend to be the most active in reporting the use of tax receipts. Hiding the use of funds is detrimental to the government, its agencies, elected officials, and the general public.