Fall 2013 Issue of Horizons

It is impossible for governments to report on measures such as earnings per share. Likewise, it would not make sense for their financial reports to ignore users such as citizens and elected representatives, or the implications of unique features of governments such as nonexchange transactions, the purpose of capital assets, the relative absence of liquidity risk, and the role of legally adopted budgets. As a result, GASB operates as an independent standards setting body with the primary responsibility for setting accounting standards for states and local governments. GASB has evaluated the needs of users of governmental financial statements to create a framework and standards that focus on sound management of public resources rather than the ability to generate money.

In contrast, governments use budgets for those purposes but also to control the level of taxation and the spending of resources by the government. Government budgets are legally adopted at the highest level of governance, generally in compliance with statute, ordinance, or charter, and after appropriate public forums have been conducted. Furthermore, expenditure budgets generally cannot be exceeded or significantly modified without formal action of the governing body. Because governments are legally required to adopt and adhere to budgets as part of their management of public resources, GASB requires reporting budget versus actual schedules for the general fund and major special revenue funds in the financial statements.

It Should Be Different All of these factors contribute to the need for separate accounting and financial reporting standards for businesses and governments.

RubinBrown’s Public Sector Services Group Through our extensive list of clients, including many cities and governmental entities, we understand the issues unique to the public sector.

Jeff Winter, CPA – St. Louis Partner-In-Charge Public Sector Services Group 314.290.3408 jeff.winter@rubinbrown.com

Cheryl Wallace, CPA – Denver Partner Public Sector Services Group 303.952.1288 cheryl.wallace@rubinbrown.com

Kaleb Lilly, CPA – Kansas City Partner Public Sector Services Group 913.499.4417 kaleb.lilly@rubinbrown.com

Craig White, CPA – St. Louis Manager Public Sector Services Group 314.290.3274 craig.white@rubinbrown.com

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