Question

Explain recording, reporting, and auditing requirements for local, state, and federal governments regarding financial accounting

Answer 1

Recording Requirements -

Private sector boards set the generally accepted accounting principles for the government accounting. The Federal accounting standards advisory board sets the federal accounting standards.According to these standards the financial reports should be understandable, relevant ans should give reliable information.

The government accounting standards board set the accounting principles for the local and state governments. These standards require that the government produce a government wide statement of the net assets that is similar to the balance sheet, and an statement of the activities that is similar to the profit and loss account.

Reporting Requirements-

It is the process by which government report their financial reports and activities to the public at large. They are used to compare the actual results with the posted budgets.

At the federal level, The Office of Management and Budget formulates the reporting standards. According to which they have to form a report which is combining performance and accountability report to obtain a more accurate picture of the agency performance in terms of operational and financial performance. Each agency is required to submit this report to the office of management and budget. Once it is submitted, U.S. Department of the treasuries in consultaion of the OMB issues the financial report of the Unites States Government.

At the state and local level, Three primary user categories of financial report include citizens, legislatives and oversight bodies. The most common report is the Comprehensive Financial Annual Report. Every government should punlish this. These report include information about the cost of providing government services, show all government assets and liabilites. It also enhances fund reporting and a management discussion and analysis.

Auditing Requirements -

Auditing in both private and public sector are done in accordance with the Generally accepted auditing standards. These are formulated by the American Institute of the Certified Public Accountants. Government Finance Officers Association beleives that the public sector has been very well served by Generally accepted auditing standards and Generally accepted government auditing standards. The federal government should keep on revising Generally accepted government auditing standards from time to time. The auditing requirements are pretty much the same for all the three that is local, state and federal government. They should rely upon GAAS for governing the audits of financial statements and federal financial assistance. Special federal requirements should in no way limits the powers exercised by the auditor.