Governments operate in a different environment than for-profit
businesses. As such, governments adhere to a different set of
financial reporting and accounting standards. Governmental accounting and financial reporting standards help stakeholders assess how public resources were acquired and how resources are or will be spent.
- summary of gasb concepts statement no. 1
Reporting standards help citizenry, legislative and oversight bodies, and investors and creditors assess how public resources are acquired and how resources will be spent.
Auditing is important in public-sector finance and is essential to the credibility of government financial reporting. There are three common types of audits in the public sector: *Financial statement audits *Attestation engagements *Performance audits
Financial reporting provides decision makers with financial information they need to make informed decisions and is the responsibility of the administrator of the public funds. There are two types of financial reporting. *Internal reporting *External reporting
Accounting is systematic reporting and recording of assets, liabilities, capital, income and expenditure. Because the public sector operates under a different environment then that private sector, government accounting is specific to the functions of public sector entities.