Preventing Fraud and Mismanagement in Government

Chapter 3Accounting for Government

“No man is good enough to govern another man without the other's consent.”

—Abraham Lincoln

Topics:

• Regulatory Standards and Structures
• Due Professional Care
• Financial Reporting Practices
• Following the Money and the Policies

Key Questions:

• Who's guarding the hen house?
• Who audits the auditor?
• Who's watching?
• What personalities are involved in the accounting functions and the behavior that surrounds these functions?

GOVERNMENTAL ENTITIES have certain standards and practices in terms of accounting. Government Auditing Standards (aka “Yellow Book”) from the Government Accountability Office (GAO) provide a set of standards for accounting in public agencies. The problem is that standards mean something only if the people held to the standards apply them. There remains differences of opinions and leeway in applying any standard. Yet there is considerable interpretation and application of these standards in accounting practice between governmental agencies and divisions. How do these standards play out in the real world? How do they create the opportunity to divert resources from their intended purposes? This chapter explores the general operating practices of governmental entities and the common pitfalls that one encounters in operations and accounting for governmental entities.

In this chapter think of the authors as government accounting guides intent on demystifying government accounting. In order to create demystifying aids, it is ...