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What is government accounting?

What is government accounting?

Governmental accounting, according to the GAAFR \ the Blue Book, refers to all public sector activities, or government-supported activities, which include: grants, taxes, and revenue sources, noting that it includes five basic types:

General Fund, Capital Project Funds, Debt Service Funds, Special Revenue Funds, as well as Permanent Funds. On the other hand, government accounting is an integrated system that aims to allocate specific accounts for spending while overseeing them, and this includes registration, accountability and control, just as in the case of business, but this applies to government sector spending.

The function of government accounting, as defined in one of the World Bank reports, lies in the process of recording, describing, analyzing and classifying government financial data, and carrying out all financial work in accordance with reliable methods and at the allotted time, such as; Buying and selling assets, paying obligations, collecting dues and receivables as well as taxes, taking into consideration all necessary financial controls and restrictions.

The Governmental Accounting Standards Board, which is abbreviated as GASB, denotes one of the non-governmental organizations established in 1984, which is directly concerned with setting clear standards for the preparation of agreed accounting reports for local governments in the United States of America. Financial, prevents manipulation and achieves transparency.

Governmental accounting is concerned with supervising government sector expenditures, and includes preparing detailed financial reports, which maintains integrity and transparency and limits financial corruption in countries.
What is government accounting?
What is government accounting?

What are the types of government accounting?

There is a group of government funds that represent the types of government accounting, and these funds are as follows:

general fund

The General Fund or (General Fund), is the main operational fund that includes the resources of the entire government, which also absorbs resources not allocated to other funds, for example on the General Fund: the money withheld from taxes for the federal government in America is deposited with the General Fund.

Special Revenue Funds

Special Revenue Funds are the most common and used among accounting funds, for the purpose of tracking revenue from dedicated sources that are limited to certain purposes, and are suitable for financing many facilities, including: schools, public libraries, as well as parks, parks, and others which follows the state.

debt service funds

The Debt Service Fund covers debts for financing government projects, including the principal amount and the amount of interest incurred on this amount, and these debts are usually long-term and are what the debt service fund works and takes care of.

venture capital funds

The function of the Capital Projects Fund is to build major state facilities, including: public libraries, ministries buildings, hospitals, bridges and other government facilities and buildings.

permanent funds

Permanent funds are restricted endowment funds, mainly intended to disburse funds to those who deserve it, as they work permanently for the benefit of the residents of the state.

It follows from the foregoing that government accounting has five main funds, each of which has a specific function, and these funds contribute as a whole to the regulation of the financial aspect, expenditures and revenues of the government sector in particular, namely: the public fund, debt service fund, special revenue funds, funds Capital projects and permanent funds.

What is the importance of government accounting?

 The importance of government accounting lies in its various fields and functions, and it is reflected in government sectors such as health, education, and culture. The following will be discussed about these sectors:
  • Executing the government’s financial tasks in the allotted time and using the most appropriate method, such as: collecting due debts, buying or selling assets, and paying financial obligations, taking into account all the necessary financial controls.
  • Maintaining all accounting records in an organized manner, and within a mechanism through which information is easily retrieved and accessed.
  • Provide the necessary financial data periodically, which allows the competent authorities to carry out follow-up and control work, as well as enable them to take sound decisions, and provide the necessary data to auditors.
  • Providing tools and means for effective management of government expenditures, as well as government revenues.
It is noted from the above, that government accounting is of great importance in providing information and financial statements that enable governments to be held accountable, and enhance the ability to understand periodic financial reports, including annual ones, which increases the ability to make sound decisions at the right time, and is positively reflected on the economic, social, and political aspects. , etc., and guarantees spending for investment and construction of various facilities, among others.

What are the most important principles of government accounting?

The principles of government accounting differ according to the difference of the government or the state, i.e. from state to state, as well as from state to state, but they may overlap in some general principles, the most prominent of which are the following:
  • Comprehensiveness: government accounting and financial reports issued by it must include a complete summary of the annual budget, including impartial audits, which are presented on the government's official website, as well as comparing the numbers on the ground with previously expected numbers.
  • Accuracy in timing: This is represented by submitting the budget in the allotted time period without any delay, that is, publishing it at least two weeks before the voting period.
  • Accuracy and transparency: The presence of a parallel budget and the presentation of financial reports as they are without any distortion or manipulation, as the state budget must include all costs spent by the government, with a review of current and future obligations.
  • Ease of use: (Usability), by publishing the current budget on the government's website, as well as publishing the budget for the last five years, with an organized, easy and uncomplicated search mechanism, and clear methods for preparing appropriate financial reports.
There are many fixed principles on which government accounting is based, regardless of the different countries in which this accounting is applied, the most important of which are: comprehensiveness, timeliness, accuracy, transparency and ease of use.

What is the difference between government accounting and financial accounting?

The concept of financial accounting refers to one of the fields or branches of accounting that has the task of recording commercial and financial transactions during a specified period of time, as these transactions are summarized and used later in the preparation of financial statements, and this includes: income, financial flows, balance sheet, and others From data related to the operational performance of organizations in a given period of time.

Knowing that specialists in this field can work in the private and public sectors, that is, in government and private institutions alike, bearing in mind that there is a complete difference in the tasks between each of them, depending on the size of the institution, and the accountant who works personally or For his own account, for an accountant who works for a particular company, and it is worth noting that financial accounting reviews the five main classifications that are: revenues, assets, expenses, liabilities and equity, by calculating revenues and expenses and reporting them in the income statement.

The difference between government accounting and financial accounting is that the latter can be applied in various sectors, including public and private, while the work of government accounting with its functions and programs is limited to the government sector only, and this includes taxes, budgets, spending and revenues of countries or states, and accounting Governmental accounting is considered to be of a narrow and limited scope, as compared to extensive financial accounting.

Where the work of government accounting is limited to planning, follow-up and control as well as accountability, and government accounting follows the supervision of the state, while the state or the government has no right to interfere in the workflow of financial accounting in institutions that do not fall under its ownership, and government accounting follows the government budget, unlike financial accounting Which does not belong to the government budget in any way.

In conclusion, the accounting system that operates within the field of the public sector is called government accounting, and it works within this scope only, while the accounting system adopted by various business platforms in its various fields is called financial accounting, and the function of the two systems lies in understanding and determining the financial or monetary position of the institution Or the organization, whether governmental or other, in a clear, specific, impartial, accurate, periodic and regular manner.
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