What is Government Fund Accounting? GASB Compliant

As a result, modified accrual financial statements of governmental funds don’t report long-term assets/liabilities like capital assets and debt. As can be observed above, the various fund types not only differ in their practical use but also in terms of the basis of accounting applied to recognize revenue and expenditures. The governmental funds use a modified accrual basis which can be understood as a hybrid of cash and full accrual accounting. When it comes to revenues under modified accrual for governmental funds, they are recognized when reasonably available, measurable, and collectible in the current period or soon after that; more akin to cash basis accounting.

• Understand how proprietary funds are used to account for a government’s business-type activities.
• To show accountability to the people within the communities they serve, governments must provide financial data that is relevant, trustworthy, and understandable.
• The current expected due date for GASB 87 adoption is June 15, 2021, although GASB favors early adoption.
• The Government Accounting Standards Board is an independent, non-political organization founded in 1984.
• 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.
• Some forensic government accountants gain experience in local or state jurisdictions before pursuing careers in the FBI.

When the major fund criteria are applied to governmental funds, revenues do not include other financing sources and expenditures do not include other financing uses. In the United States, for instance, there are two levels of government which follow different accounting standards set forth by independent, private sector boards. At the federal level, the Federal Accounting Standards Advisory Board (FASAB) sets forth the accounting standards to follow. Similarly, there is the Governmental Accounting Standards Board (GASB) for state and local level government. Given the unique needs of governments, a different set of accounting standards have been developed for these organizations.

What is the Governmental Accounting Standards Board (GASB)?

An accurate display of how efficiently elected officials use public resources and authority is important for society to put its confidence in the government. Under the cash basis, transactions are recognized only when the actual cash transfers occur. Since these do not incorporate liabilities and assets, they rarely present the financial position of an entity. The GASB board includes seven diverse board members, including a chairman and a vice chairman. The board members are expected to deeply understand governmental accounting and finance. The FAF Board of Trustees appoints each board member for a 5-year term, and the chairman is the only full-time member of this board.

The government is restricted from using the funds, but holds them for a specific group, entity or activity. Common examples of fiduciary funds are pensions or other types of employee benefit funds. Proprietary funds are used to track and report the internal and external business-like activities within a government. Most resemble the accounting system of for-profit entities with revenue recognized when earned and expenses recognized when incurred, also known as the full accrual basis of accounting.

Public Account

Specializations, location, experience, and education can affect an accountant’s earning potential. With experience and education, internal auditors can move from governmental accounting entry-level positions to more advanced roles. Positions like intermediate, senior, and chief internal auditor often come with increased earning potential.

• By segregating resources into multiple funds, a government can more closely monitor resource usage, thereby minimizing the risk of overspending or of spending in areas not authorized by a government budget.
• On the other hand, fiduciary and proprietary funds both use the full accrual basis similar to commercial entities.
• National long-term projections of employment growth may not reflect local and/or short-term economic or job conditions, and do not guarantee actual job growth.
• The governmental funds use a modified accrual basis which can be understood as a hybrid of cash and full accrual accounting.
• Audits double-check that records are accurate, budgets have been adhered to and all public funds are accounted for.
• Tax attorneys need a strong understanding of tax codes and laws, general law, and legal processes.