Governmental accounting has a long history of development. Although the designation of specialized standards-setting bodies has been relatively recent, with the Governmental Accounting Standards Board (GASB) being created in 1986 and the Federal Accounting Standards Advisory Board (FASAB) in 1999. Since CPAs provide audit and accounting services for, or may be employed by, all levels of government entities, the existence of reporting standards and the ability to provide guidance to reporting entities is extremely important. CPAs must balance keeping up with reporting guidelines with assisting government entities in meeting those requirements and staying or becoming fiscally responsible.
Truth in Accounting’s (TIA) State of the States Report for 2016 (http://bit.ly/2E3Tfp5) revealed that 28 states did not file their financial statements within the 180-day time limit, and 41 states did not have enough cash to pay their debts. Readers can explore the taxpayer burden or surplus for all 50 U.S. states from 2009 through 2016 on TIA’s State Data Lab (https://www.state-datalab.org/). For New York, as an example, the per capita burden grew from $13,000 to over $20,000. Similarly, TIA’s State of the Cities Report for 2016 (http://bit.ly/2E3Tfp5) indicated that 30% of the 75 most populated cities examined did not file their financial statements within the 180-day time limit, and 85% did not have enough cash to pay their debts.
Federal Accounting Standards Advisory Board
The FASAB was created in 1990 by the U.S. Government Accountability Office, Department of the Treasury, and Office of Management and Budget, and issued its first Statement of Federal Financial Accounting Standards (SFFAS) in 1993. FASAB became the designated GAAP setter for federal entities several years later. The FASAB website (http://www.fasab.gov) offers well-organized access to the agency’s standards and guidance, active and archived projects, financial reporting resources, and managerial cost accounting resources.
The Standards & Guidance webpage (http://www.fasab.gov/accounting-standards/) is probably the most important feature of the site. The 2,477-page FASAB Handbook of Federal Accounting Standards and Other Pronouncements, as Amended (June 30, 2017) can be accessed without charge as a complete volume or by individual chapter (http://bit.ly/2GndBvk). The Handbook contains the Statements of Federal Accounting Concepts (no. 1–7), Statements of Federal Financial Accounting Standards (no. 1–52), Interpretations, Technical Bulletins and Releases, and Staff Implementation Guidance. The table of contents lists every document included and is hyperlinked to navigate to the exact resource desired. Pronouncements issued after the handbook publication date are listed individually on the Standards & Guidance webpage and are downloadable in PDF format. As an example, Statement of Federal Financial Accounting Concepts 8, Federal Financial Reporting, issued in September 2017, runs approximately 30 pages and includes a discussion of required supplemental information.
The Resources table of contents page (http://fasab.gov/resources/) is a good starting point for information on federal financial reports, managerial cost accounting resources, links to other websites, and other FASAB materials. The Federal Financial Reports main page includes links to financial reports of the federal government and its various agencies, such as the Departments of Commerce and Homeland Security, as well as the Securities and Exchange Commission (http://bit.ly/2J2l2Kh). This is a handy way to access the specific agency annual report web pages, which open in separate windows, allowing the user to remain connected to the FASAB website. The U.S. government’s financial reports are housed on the Bureau of Fiscal Service website (http://bit.ly/2J5T6VC) and can be downloaded in whole or in individual sections. A 52-page guide to “Understanding the Financial Report of the United States Government” (GAO-18-239SP, February 2018) is available through the FASAB website and provides user friendly explanations of some of the governmental-specific reporting requirements, such as statement of net cost, reconciliation of net operating revenue (or cost) and budget surplus, and a statement of long-term fiscal projections (http://bit.ly/2GSr7bf). The illustrative list of notes to the financial statements is particularly helpful, and the document ends with some graphics of the interrelationships between the financial statements.
The FASAB website also features Managerial Cost Accounting Resources (http://bit.ly/2pPUjYh), including FASAB pronouncements and special forum presentation materials, guides and manuals developed by other federal agencies, reports and reference tools from professional bodies, and links to nongovernmental websites with cost accounting information. Links to Other Helpful Websites (http://bit.ly/2pOyMAi) is worth a look, as it includes over 40 sites grouped under accounting, accounting and auditing, auditing, other, and standard setters. Examples include professional accounting associations, government agencies, and a variety of federal law and regulation resources.
Government Finance Officers Association
The Government Finance Officers Association (GFOA) is a membership organization of more than 19,000 federal, state, and local public finance officials from the United States and Canada. More than half of its members are CPAs, and over 50% work at the local government level. GFOA was founded over 100 years ago to develop and promote the use of uniform standards and procedures for governmental finance managers, and maintains offices in Chicago and Washington, D.C. Its website (http://www.gfoa.org) presents extensive resources for best practices, topical content, public policy statements, free research reports, and relatively low-cost publications.
Best practices (http://www.gfoa.org/best-practices) are generated to identify and promote policies and procedures designed to improve government management. There are currently around 200 best practice ideas, organized both alphabetically and topically, such as accounting and financial reporting, budgeting and financial planning, and technology. Each best practice is housed on its own printer-friendly webpage and includes background information and references.
As an example, under accounting and financial reporting, “GAAP Financial Reporting as the Base Line for State and Local Governments” (http://bit.ly/2IfUGTw) recommends maintaining books and records in sufficient detail to allow preparation of financial statements in accordance with GAAP, or on a modified cash basis for smaller entities. Regardless of accounting basis, GFOA recommends that the financial statements be independently audited in accordance with standards. “Fund Accounting Applications” (http://bit.ly/2J2Vpc2) recommends that managers carefully review a government entity’s fund accounting system and make a reasoned determination of whether particular funds should be reported individually in the financial statements or combined with other funds for presentation purposes. A relatively long and informative technology best practice, “Website Posting of Financial Documents” (http://bit.ly/2Iee7Mx), discusses several benefits and provides detailed methodology for formatting and infrastructure.
The Accounting Resource Centers (http://bit.ly/2GEjcR9) are excellent collections of best practices, advisories, templates, tools, examples, and additional links. There are currently 12 centers, including accounting, auditing, budgeting, and financial reporting. The accounting resource center (http://bit.ly/2Gp2qCb), as an example, presents best practices on policies, capital assets, cost accounting, disaster recovery, and grants. The financial reporting resource center (http://bit.ly/2uBoc4s) covers topics and guidelines, financial statement preparation, specific applications, departmental reporting, and non-GAAP reporting. It also links to a database of searchable annual reports at the very bottom of the web page.
Guidance and Data
Bureau of the Fiscal Service
The U.S. Standard General Ledger
Government Finance Officers Association
Annual Report Databases
Office of Management and Budget
Circular A-136, Financial Reporting Requirements
In addition, GFOA offers numerous low-cost publications, free research reports, and continuing education ranging from webinars to live seminars. Many states and provinces have their own professional associations, and the GFOA website provides an extensive list with website links.