Public-sector accounting.(Perspectives)

Accounting, auditing, and financial reporting provide the informational infrastructure for state and local government finance. Like its physical counterpart, this informational infrastructure is easy to take for granted--at least until something goes wrong! This issue of Government Finance Review invites readers to take a more intentional approach to recent developments and ongoing challenges.

February 2009 saw the release of Governmental Accounting Standards Board (GASB) Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. This newest GASB pronouncement will significantly alter how fund balance, undoubtedly the most discussed single item in a typical state or local government's financial statements, will henceforth be presented. The complete overhaul in the terminology used to describe fund balance reflects an even more fundamental conceptual shift. The lead article in this month's issue, Fund Balance: New and Improved, explores these critical changes.

Of course, financial reports are only as reliable as the underlying data they present. That simple fact has attracted increasing attention to the role of management and of the governing board in ensuring that a comprehensive framework of internal control is in place. In When Leadership Fails, Dennis Dycus explores what happens when either of these groups does not play its assigned role.

The quality of financial reports also depends on the criteria used to present them, which are formally known as generally accepted accounting principles (GAAP). For state and local governments, GAAP have been promulgated by the GASB since June 1984. In The GASB Turns 25: A Retrospective, Terry K. Patton and Dr. Robert J. Freeman, one of the premier academics in the field of governmental accounting and financial reporting, and a ten-year GASB board member (retired), share their unique perspective on the progress made in governmental GAAP over the past quarter century.

Virtually all state and local governments must confront the ongoing challenge of properly accounting for their capital assets. The GFOA recently issued the book Accounting for Capital Assets: A Guide for State and Local Governments to provide assistance in this regard. In Capital Confusion: Twelve Misunderstandings about Accounting for Capital Assets, guidance from the new GFOA publication is applied to a dozen problematic situations commonly encountered in practice.

It is our hope that these articles will spark increased interest among finance officers generally in a field all too long left to the sole concern of accounting and auditing professionals.

Stephen J. Gauthier

Director, Technical Services Center

Government Finance Officers Association

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