Question

Discussion Questions

What is the role of accountability and transparency in governmental financial statements?
How are users of these financial statements able to judge whether the government’s fiscal condition is sustainable?

Answer 1

Government accounting and financial reporting aims to protect and manage public money and discharge accountability. Accountability is about being responsible to someone for actions taken. It implies that someone has a right to know and hold an organisation to account; and that the organisation has a duty to explain and account for its actions. Transparency means public has all the necessary information what they should have. When public has all the relevant information, transperency and governance improves.

The GASB’s formal mission reads as follows:

To establish and improve standards of state and local governmental accounting and financial reporting that will:

• result in useful information for users of financial reports, and
• guide and educate the public, including issuers, auditors, and users of those financial reports.

Fiscal Sustainability means

• The ability and willingness to maintain or improve services
• The ability and willingness to meet financial obligations
• The ability and willingness to achieve and maintain intergenerational equity
• The ability and willingness to balance revenues and expenses.

Users of financial statements come to know about the condition of government;s fiscal condition is by reading the reports. If the reports are transparent, it improves the chances of judging the government’s fiscal condition. Also, government is accountable to the public and society to present their fiscal conditions through press releases, audit reports, management reports etc.