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Generally Accepted Accounting Principles is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC) and is the default accounting standard used by companies based in the United States.
Publicly traded companies typically are subject to rigorous standards. Small and midsized businesses often follow more simplified standards, plus any specific disclosures required by their specific lenders and shareholders. Some firms operate on the cash method of accounting which can often be simple and straightforward. Larger firms most often operate on an accrual basis. Accrual basis is one of the fundamental accounting assumptions and if it is followed by the company while preparing the Financial statements then no further disclosure is required. Accounting standards prescribe in considerable detail what accruals must be made, how the financial statements are to be presented, and what additional disclosures are required.
Public finance is the study of the role of the government in the economy. It is the branch of economics that assesses the government revenue and government expenditure of the public authorities and the adjustment of one or the other to achieve desirable effects and avoid undesirable ones. The purview of public finance is considered to be threefold, consisting of governmental effects on:
- The efficient allocation of available resources;
- The distribution of income among citizens; and
- The stability of the economy.
In many states with political systems derived from the Westminster system, a consolidated fund or consolidated revenue fund is the main bank account of the government. General taxation is taxation paid into the consolidated fund, and general spending is paid out of the consolidated fund.
The National Audit Office (NAO) is an independent Parliamentary body in the United Kingdom which is responsible for auditing central government departments, government agencies and non-departmental public bodies. The NAO also carries out value for money (VFM) audits into the administration of public policy.
PAYGO is the practice in the United States of financing expenditures with funds that are currently available rather than borrowed.
International Public Sector Accounting Standards (IPSAS) are a set of accounting standards issued by the IPSAS Board for use by public sector entities around the world in the preparation of financial statements. These standards are based on International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB).
A government budget is a projection of the government's revenues and expenditure for a particular period of time often referred to as a financial or fiscal year, which may or may not correspond with the calendar year. Government revenues mostly include taxes while expenditures consist of government spending. A government budget is prepared by the government or other political entity. In most parliamentary systems, the budget is presented to the legislature and often requires approval of the legislature. Through this budget, the government implements economic policy and realizes its program priorities. Once the budget is approved, the use of funds from individual chapters is in the hands of government ministries and other institutions. Revenues of the state budget consist mainly of taxes, customs duties, fees and other revenues. State budget expenditures cover the activities of the state, which are either given by law or the constitution. The budget in itself does not appropriate funds for government programs, hence need for additional legislative measures. The word budget comes from the Old French bougette.
Fund accounting is an accounting system for recording resources whose use has been limited by the donor, grant authority, governing agency, or other individuals or organisations or by law. It emphasizes accountability rather than profitability, and is used by Nonprofit organizations and by governments. In this method, a fund consists of a self-balancing set of accounts and each are reported as either unrestricted, temporarily restricted or permanently restricted based on the provider-imposed restrictions.
Materiality is a concept or convention within auditing and accounting relating to the importance/significance of an amount, transaction, or discrepancy. The objective of an audit of financial statements is to enable the auditor to express an opinion on whether the financial statements are prepared, in all material respects, in conformity with an identified financial reporting framework, such as the Generally Accepted Accounting Principles (GAAP) which is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC).
GASB 45, or GASB Statement 45, is an accounting and financial reporting provision requiring government employers to measure and report the liabilities associated with postemployment benefits. Reported OPEBs may include post-retirement medical, pharmacy, dental, vision, life, long-term disability and long-term care benefits that are not associated with a pension plan. Government employers required to comply with GASB 45 include all states, towns, education boards, water districts, mosquito districts, public schools, and all other government entities that offer OPEB and report under GASB.
An Annual Comprehensive Financial Report, formerly called Comprehensive Annual Financial Report (CAFR)) is a set of U.S. government financial statements comprising the financial report of a state, municipal or other governmental entity that complies with the accounting requirements promulgated by the Governmental Accounting Standards Board (GASB). GASB provides standards for the content of a Comprehensive Annual Financial Report in its annually updated publication Codification of Governmental Accounting and Financial Reporting Standards. The U.S. Federal Government adheres to standards determined by the Federal Accounting Standards Advisory Board (FASAB).
The Tuvalu Trust Fund is an international sovereign wealth fund established to benefit Tuvalu, a small, central Pacific island nation, by providing income to cover shortfalls in the national budget, underpin economic development, and help the nation achieve greater financial autonomy. The Tuvalu Trust Fund was established in 1987 by the United Kingdom, Australia and New Zealand.
Canadian public debt, or general government debt, is the liabilities of the government sector. Government gross debt consists of liabilities that are a financial claim that requires payment of interest and/or principal in future. They consist mainly of Treasury bonds, but also include public service employee pension liabilities. Changes in debt arise primarily from new borrowing, due to government expenditures exceeding revenues.
Whole of Government Accounts (WGA) is the annual publication by the United Kingdom Government of the consolidated financial statements of over 5,500 organisations across the public sector. It aims to provide more complete data for fiscal planning by producing consolidated financial statements which are produced in accordance with the International Financial Reporting Standards (IFRS), the system of accounts used internationally by the private sector.
The Fiscal Responsibility and Budget Management Act, 2003 (FRBMA) is an Act of the Parliament of India to institutionalize financial discipline, reduce India's fiscal deficit, improve macroeconomic management and the overall management of the public funds by moving towards a balanced budget and strengthen fiscal prudence. The main purpose was to eliminate revenue deficit of the country and bring down the fiscal deficit to a manageable 3% of the GDP by March 2008. However, due to the 2007 international financial crisis, the deadlines for the implementation of the targets in the act was initially postponed and subsequently suspended in 2009. In 2011, given the process of ongoing recovery, Economic Advisory Council publicly advised the Government of India to reconsider reinstating the provisions of the FRBMA. N. K. Singh is currently the Chairman of the review committee for Fiscal Responsibility and Budget Management Act, 2003, under the Ministry of Finance (India), Government of India.
The Budget of His Majesty's Government is an annual budget set by HM Treasury for the following financial year, with the revenues to be gathered by HM Revenue and Customs and the expenditures of the public sector, in compliance with government policy. The budget statement is one of two statements made by the Chancellor of the Exchequer in the House of Commons, with the Spring Statement being made the following year.
Fiscal transparency refers to the publication of information on how governments raise, spend, and manage public resources. More specifically, it means publication of high quality information on how governments raise taxes, borrow, spend, invest, and manage public assets and liabilities.
A Public Sector Balance Sheet, like a balance sheet in the corporate world, reports comprehensively on what a government owns and owes, as well as its own capital. As such, it is a critical element of a system of Public Financial Management. A balance sheet, or statement of financial position, recognises and discloses the assets, liabilities, and net worth at a given point in time, for a government entity, a government or the whole public sector. An important metric for the fiscal position of the whole public sector is public sector net worth.
Accrual accounting in the public sector is a method to present financial information on government operations. Under accrual accounting, income and expenditure transactions are recognized when they occur, regardless of when the associated cash payments are made. The difference between public sector accrual accounting and cash accounting is most apparent in the treatment of capital assets. Under accrual accounting, expenditure on capital is added as an asset in the government's balance sheet in the year the capital is purchased, but the cost is not included in the year's budget as an operating expense. Instead, payment for capital used is included in that year's budget as an operating expense.
References
- ↑ "Whole of Government Accounts" (web). UK Government Date=2 August 2013).
- ↑ "Guidance to the Whole of Government Accounts y/e 31/03/10 (vid. p.4)" (PDF). HM Treasury . Retrieved 27 January 2011.
- ↑ Plummer, Elizabeth; Hutchison, Paul D.; Patton, Terry K. (2007). "GASB No. 34's Governmental Financial Reporting Model: Evidence on Its Information Relevance". The Accounting Review. 82 (1): 205–240. ISSN 0001-4826.
- Transition to Accrual Accounting -- IMF Technical Guidance Note, Abdul Khan, IMF, 2007
- International Public Sector Accounting Standards (IPSAS) research paper Study 14: Transition to the Accrual Basis of Accounting: Guidance for Governments and Government Entities, 2007 International Federation of Accountants(IFAC)
- Budget Explained by The Economic Times
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