Fall 2013 Issue of Horizons

PUBLIC SECTOR

Why Accounting and Financial Reporting for Governments is Different than Businesses by Craig White, CPA

T here are over 80,000 state and local governmental entities in the United States consisting of counties, municipalities, townships, independent school districts, and special districts. Each government must adhere to accounting and financial reporting standards set by the Governmental Accounting Standards Board (GASB). These standards and the resulting financial statements are similar to those of businesses, but maintain a number of key

differences, which often prompt individuals with business backgrounds to ask the question: Why are the standards different for governments? This is a question that the GASB recently tackled in its White Paper titled, Why Governmental Accounting And Financial Reporting Is – And Should Be – Different. In short, the answer is the standards differ because the environments of governments and businesses and the users of their financial statements differ.

page 26 | horizons Fall 2013