Category: 

What Is Government Accounting?

Article Details
  • Written By: Osmand Vitez
  • Edited By: Jenn Walker
  • Last Modified Date: 29 November 2014
  • Copyright Protected:
    2003-2014
    Conjecture Corporation
  • Print this Article
Free Widgets for your Site/Blog
The Queen of England legally owns about one-sixth of all of the land on Earth.  more...

December 20 ,  1860 :  South Carolina seceded from the US.  more...

Government accounting is a broadly-based term that describes the specific accounting functions of public sector entities in the United States (U.S.). Government accounting principles are used in the federal, state and local agencies found in the public sector. Federal government entities usually follow the accounting principles or guidelines developed by Federal Accounting Standards Advisory Board (FASAB). State and local governments may be required to follow the accounting principles and guidelines developed by the Governmental Accounting Standards Board (GASB).

According to its website, FASAB was established in 1990 to develop specific accounting standards and principles for the U.S. government. FASAB works in conjunction with the Congressional Budget Office, Secretary of the Treasury, Director of the Office of Management and Budget and Comptroller General of the United States when developing government accounting standards. These agencies may also help choose the board members that direct the specific accounting activities of FASAB.

GASB is an extension of the Financial Accounting Foundation (FAF) and the Financial Accounting Standards Board (FASB). GASB is responsible for providing guidance to state and local government entities regarding the application of Generally Accepted Accounting Principles (GAAP). GASB also attempts to improve the reporting capacity for state and local entities regarding important financial information. Providing guidance on audits for financial functions is another important part of government accounting.

Ad

Government accounting typically uses funds, budgets, appropriations or encumbrances when recording and reporting financial information. Fund accounting separates the money received by government entities into separate accounts for use in government operations. These funds are generally linked to government projects such as infrastructure, maintenance, school services, public services or other various government expenditures. Budgets are developed to help federal, state and local government entities determine the financial means for future time periods. These budgets usually are created from the prior year’s information. Government entities also attempt to project the money needed to pay for future services and determine if tax increases are needed to pay for these services.

Appropriations occur when government entities specifically set aside money for certain purposes. These appropriations usually represent a specific use for the funds received by a government entity. Once a government entity appropriates money for a specific use, it is usually not allowed to change the appropriation request.

Encumbrances are specific uses for government collected receipts, and they usually occur before the government collects income or tax receipts from citizens. Governments typically use encumbrances for business contracts, purchases of equipment, payroll or other items specifically needed to run the government entity.

Ad

More from Wisegeek

You might also Like

Discuss this Article

whiteplane
Post 2

So can anybody give me some more detail on the types of checks and processes that are in place to keep government accounting from going crazy?

I know the article explained how the GASB and the GAAP procedures, but what does this look like on an everyday, local level? I mean, does the government get audited or what?

tigers88
Post 1

Government accounting is a notoriously slippery and manipulative process. By switching around just a few numbers it is possible to add or subtract billions of dollars from the books.

Whenever I hear government officials quoting numbers about how much a project will cost or how much money will be saved I always take them with a grain of salt. Frankly, they are politically motivated. If the want it to look cheap they can make it look cheap. If the want it to look expensive they can do the same.

Luckily there are a few good non partisan relatively objective sites out there which can help you get closer to the real numbers. Without responsible citizens like these keeping an eye on the way the feds actually govern there is no telling what they wold be able to get away with.

Post your comments

Post Anonymously

Login

username
password
forgot password?

Register

username
password
confirm
email