Quiz 1: Introduction to Accounting and Financial Reporting for Governmental and Not-For-Profit Organizations
a. The inclusive dates of the fiscal year are January to December. b. The GASB is audited by MC Gladrey LLP. It is located in New Haven Connecticut. The auditors have given unqualified opinion. The opinion has been given on combining and individual fund statements. c. The report has single audit section given at the end of the audit report. d. Yes. The report contains the table of contents and list of principal officers and signed by chief financial officer. It states the financial responsibility of the management and internal controls. e. Yes. The report contains the management and analysis. The major items of discussion in this report are direct costs of subscription and publications, program expenses, support expenses, pension-related changes not reflected in operating expenses and class action settlement. f. No. the report doesn't include the government-wide statements. g. No. The report doesn't reflect the fund financial statements.
Government Entity: An entity which undertakes public welfare activities through a legislative process. Rather than earning profits, sole focus is public welfare of its citizens. For Profit Entity: An entity established with objective to generate profit by the entity's owner through sale of goods or services to the general public. Environmental Differences between Governments and For Profit Organizations: 1. Organization Purpose : Governments exist to provide public welfare activities for its citizens while for profit entity exist to earn profits for the owner. 2. Revenue Source : Almost all Governments collect revenue in the form of taxes from its citizens as individual tax or business entities tax which is often perceived as great value and at fair price for its services. For profit organization earn revenue from sale of its goods and service with varying prices to its customers. 3. Potential for longevity : Government does not shut down or close its operations while for profit entities might go out of its business with its ability to collect taxes. Therefore, governments require different accounting to focus its operations to long term objective from any term recovery of its investment in assets. 4. Stakeholders Relationship: A Governments stakeholders are its citizens, creditors and business as they collect taxes and borrow funds. Therefore have an obligation to demonstrate its accountability to use of public funds. For profit entities stakeholders are its customers, employees, shareholders and creditor and therefore to provide information to its users. 5. Role of Budget: For profit entities prepare budgets for planning and control purposes only and not required to be made available to its creditors or investors. While Governments use budget as an expression of public policy with legislative authority to record spending of public funds. Therefore, a budget is very important tool in Government accounting for reporting it in its financial statements to demonstrate its accountability to its stakeholders. The above are the various environmental differences between government and for profit entities. Conclusion- A Government entity exists to provide public welfare activities without earning profits for such activities. Revenue to governments is in form of tax collection. For profit entities are established to earn revenue by way of sale of goods and services to its customers.
Government Entity: An entity which undertakes public welfare activities through a legislative process. Rather than earning profits, sole focus is public welfare of its citizens. For Profit Entity: An entity established with objective to generate profit by the entity's owner through sale of goods or services to the general public. Three Standards Setting Bodies for Government for Government: 1. Government Accounting Standards Board (GASB) : It is standard setting body for accounting and financial statement reporting for local and state governments including not for profit entities. 2. Financial Accounting Standards Board (FASB): It is standard setting body for accounting and financial statement reporting for non-government entities which includes business entities and not for profit based government entities. 3. Federal Accounting Standards Advisory Board (FASAB): Establishes accounting standard for federal government and its agencies by Principle (The Director of Office of Management and Budget, the Comptroller General of United States and Secretary of Treasury. With principles approval such standards are incorporated as generally accepted accounting standards. The above are the three government standards setting bodies in the United States of America. Conclusion- The three government standard setting bodies are the GASB, FASB and FASAB.