Introduction to State & Local Governmental Accounting
Purpose of Governmental Accounting
State and local governmental accounting differs significantly from business accounting because governments exist to provide public services rather than generate profits. Financial reporting emphasizes accountability, stewardship, and compliance with legal and budgetary requirements. The Governmental Accounting Standards Board (GASB) establishes accounting standards for U.S. state and local governments.
- Focuses on public accountability.
- Measures the use of public resources.
- Uses fund accounting to separate activities.
- Follows GASB standards instead of FASB.
Note
Governmental accounting is one of the most unique and heavily tested topics on the CPA (USA) FAR exam.
Summary
Governmental accounting emphasizes accountability for public resources rather than profitability.