Financial accountability is a vital element of public accounting in the modern times. Government and non-profit entities express their accountability for public funds through financial reporting. They release multiple management and financial reports highlighting the inflow of money, expenditure, contracts, and other aspects that may satisfy the expectations of the stakeholders. In this case, the stakeholders include the volunteers, donors, financiers, government officials, and members of the general populace. The non-profit and government entities use public accounting standards, statements, and reporting frameworks that are similar in some ways. However, there are unique differences in some instances as discussed below. Further information about The Basics Of Certified Public Accounting can be accessed by clicking at https://keselwest.com/basics-certified-public-accounting/
Every profession operates under a structure of guidelines and principles that govern how personnel do their work. Accountants working for governments and non-profit establishments follows the Generally Accepted Accounting Principles to guarantee accuracy, effectiveness, and efficiency of public accounts released by these organizations. Additionally, public accounting for governments is required to conform to the practices formulated and ratified by the Government Accounting Standards Board while the non-profit accountants should adhere to the regulations set by Financial Accounting Standards Board.
The Government Accounting Standards Board offers guidelines for stakeholders like investors, public officials, taxpayers, and seo companies, read more information about seo companies at seo erie pa. Meanwhile, the Financial Accounting Standards Board targets the investors and other stakeholders who require financial reports for public decision-making processes. Both frameworks use inclusive and transparent processes to formulate and release accounting standards designed to enhance proper and accurate financial reporting.
The non-profit organizations and government agencies use several financial statements that are similar in format, requirements, and content. The first is the [Statement of Cash Flows](investopedia.com/articles/04/033104.asp), which enables stakeholders to track the sources of income, expenditure, and the monetary operations associated with their entities. The second statement involves the [Statement of Activities](accountingcoach.com/blog/what-is-the-statement-of-activities), which outlines the general standing of the organization as opposed to solely concentrating on the funds. It highlights the revenues, expenses, as well as how the expenses and revenues affect the net assets.
However, the third financial statement that both entities use is different despite technically having numerous similarities. Public accounting personnel dealing with governments refer to it as the Statement of Net Assets while their peers working for the non-profit establishments call it the Statement of Financial Position. Academicians and accounting professionals agree that there is no difference between these reporting apparatuses and the balance sheets used by the private sector.
Government organizations in the advanced democracies document the Comprehensive Annual Financial Report at the end of each year to communicate their financial standing. These reports are formulated and compiled using the aforementioned Generally Accepted Accounting Principles as well as the guidelines supported by the Government Accounting Standards Board. They offer a comprehensive view of an entity’s overall financial status through consolidated monetary statements. To read further information about annual financial report, click here.
The law does not make it mandatory for the non-profit establishments to generate, document, and release public declarations comparable to the Comprehensive Annual Financial Report. Nonetheless, all non-profit entities are directed to generate, document and issue comprehensive financial reports to the investors and the Board of Directors. In recent years, non-profit agencies have embraced the use of fund accounting software to make and release financial reports on a timely and effective manner. They are responding to constant criticism from the public, who feel that their reports are difficult to analyze and understand.