Standards and Issues in Governmental Accounting and Financial Reporting

It is increasingly desirable and even necessary for practitioners and academicians in public budgeting and financial management to understand the contents of government accounting and financial reporting standards, and to evaluate related institutional issues. Both in theory and practice, these fields are highly interdependent, so much so that problems in one cannot be successfully solved without the assistance of the others. However, the development of specialties and their nomenclatures have tended to inhibit communications across disciplinary and professional boundaries. When budgeting and financial management personnel are familiar with the potentials and limitation of governmental accounting, they will be able to effectively use accounting information. In addition, allegations of deficiencies in accounting and financial reporting standards and practices have been linked with a number of well-publicized local governmental financial crises. Some critics have attempted to generalize these instances into a rather pessimistic picture of the current standards and practice. Since accounting and financial reporting are a responsibility and an integral part of financial management, financial managers need the conceptual tools to oversee, evaluate and assist the accounting and financial reporting function. The purpose of this article is to discuss some important conceptual and institutional issues associated with current accounting and financial reporting standards for state and local government. Special attention is paid to the interactions between these issues and public budgeting and financial management.