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Public vs. Private Sector Budgeting and Financial Reporting, Exams of Management Accounting

Stanford UniversityManagement Accounting

The differences between budgeting and financial reporting in the public and private sectors. It covers topics such as primary control devices in government, government revenues, legal and performance accountability, tax equity, and financial reporting standards. The document also explains the role of various accounting standards boards and their responsibilities. It emphasizes the importance of financial reporting in assessing accountability and making economic, social, and political decisions.

Typology: Exams

2023/2024

Available from 10/21/2023

DrShirleyAurora
DrShirleyAurora ๐Ÿ‡บ๐Ÿ‡ธ

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CGFM Exam: Section 1, Chapter 1
Difference between a budget in public vs. private sector? -
โ€† โ€† โ€† โ€† โ€† Public sector = Law/Private sector = benchmark for performance and goals for growth
Primary control device in Govt? -
โ€† โ€† โ€† โ€† โ€† budget
Financial Reports -
โ€† โ€† โ€† โ€† โ€† primary mechanism by which public officials are able to demonstrate accountability. They
show how much was raised, how it was spent, and whether spending was in compliance with the
budget.
State Authority -
โ€† โ€† โ€† โ€† โ€† All the powers not set forth in the constitution are left to the states
Govt Revenues are -
โ€† โ€† โ€† โ€† โ€† involuntary revenue source - tax assessments, licenses, fees, permits and user fees
legal accountability -
โ€† โ€† โ€† โ€† โ€† the need to comply with various laws, rules and regulations
performance accountability -
โ€† โ€† โ€† โ€† โ€† ensuring that governments act in an efficient, effective or economic manner
Fiscal Accountability -
โ€† โ€† โ€† โ€† โ€† raising of resources and the allocation of those resources to accomplish objectives. Officials
are accountable for the resources raised and how they are used.
Operational Accountability -
โ€† โ€† โ€† โ€† โ€† Involves stewardship of public resources. Public officials must ensure resources are used
appropriately
Which branch is accountable to public for raising of resources and for determining how those
resources are to be used? -
โ€† โ€† โ€† โ€† โ€† legislative
Tax equity -
โ€† โ€† โ€† โ€† โ€† current generation of citizens are accountable for paying for current-yr services; can't shift
burden to future-yr taxpayers
debt ceiling -
โ€† โ€† โ€† โ€† โ€† an accountability mechanism that allows Congress to monitor the financial effects of
spending and tax policies
Govt Financial Reporting assists with: -
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CGFM Exam: Section 1, Chapter 1

Difference between a budget in public vs. private sector? - Public sector = Law/Private sector = benchmark for performance and goals for growth Primary control device in Govt? - budget Financial Reports - primary mechanism by which public officials are able to demonstrate accountability. They show how much was raised, how it was spent, and whether spending was in compliance with the budget. State Authority - All the powers not set forth in the constitution are left to the states Govt Revenues are - involuntary revenue source - tax assessments, licenses, fees, permits and user fees legal accountability - the need to comply with various laws, rules and regulations performance accountability - ensuring that governments act in an efficient, effective or economic manner Fiscal Accountability - raising of resources and the allocation of those resources to accomplish objectives. Officials are accountable for the resources raised and how they are used. Operational Accountability - Involves stewardship of public resources. Public officials must ensure resources are used appropriately Which branch is accountable to public for raising of resources and for determining how those resources are to be used? - legislative Tax equity - current generation of citizens are accountable for paying for current-yr services; can't shift burden to future-yr taxpayers debt ceiling - an accountability mechanism that allows Congress to monitor the financial effects of spending and tax policies Govt Financial Reporting assists with: -

(1) assess accountability & (2) helps make economic, social, and political decisions point-in-time reports - provides current information as of the date of the report. Ex) Balance Sheet period reports/flow reports - period report covers the entity's entire fiscal year. Ex) operating statement or cash slow statement characteristics of financial reports - (1) Understand-ability (2) Reliability (3) Relevance (4) Timeliness (5) Consistency (6) Comparability "Sunshine Laws" - freedom of information laws; govt should operate in the sunshine DATA Act 2014 - established govt-wide financial data standards and the increased availability, accuracy, and usefulness of federal spending info the Federal Funding Accountability and Transparency Act of 2006 (FFATA) - enacted to enable taxpayers and policy makers to track federal spending more effectively; precursor to DATA ct 2014 Financial Accounting Foundation (FAF) - granted the authority to promulgate accounting and reporting standards from the SEC. Appoints members of the FASB. Financial Accounting Standards Board - has the authority to establish accounting and reporting standards for private sector companies, including not-for-profit organizations. Govt Accounting Standards Board (GASB) - established in 1984, establishes accounting rules for state and local govts Federal Accounting Standards Advisory Board (FASAB) - Established in 1990; responsible for issuing accounting standards for FED govt International Public Sector Accounting Standards Board (IPSASB) - develops international public sector accounting standards for use by public sector entities around the world for preparation of general purpose financial statements due process - designed to permit a timely, thorough and open study of accounting and financial reporting issues.

  1. pronouncements of other accounting and financial reporting standards-setting bodies, such as the FASB, GASB, and IPSASB; professional assoc or regulatory agencies; and accounting textbooks, handbooks and articles. (example: FASAB concept statements) Statement of Federal Financial Accounting Standards (SFFAS) 34 - establishes FASAB hierarchy GASB Statement No. 76 - The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. GASB Hierarchy - Category A: Officially established accounting principles-GASB Statements Category B: GASB Technical Bulletins; GASB Implementation Guides; and literature of the AICPA cleared by the GASB What guidance should be used if the accounting treatment for a transaction or other event is not specified within a source of authoritative GAAP? - a governmental entity should first consider accounting principles for similar transactions or other events within a source of authoritative GAAP. It then may consider nonauthoritative accounting literature from other sources that do not conflict with or contradict authoritative GAAP. interperiod equity. - determining if current year revenues are sufficient to finance current-year services.