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Governments provide services such as roads, public safety, transportation, building inspections, water and sewer, electricity, and court systems. The Governmental Accounting Standards Board (GASB) provides the accounting framework for these types of entities. So they create their financial statements using the GASB standards. Nongovernmental entities often use accounting standards promulgated by the Financial Accounting Standards Board.

One hallmark of governments is the existence of nonexchange transactions. For example, these entities tax citizens and those funds are used for a myriad of purposes such as funding the police department or providing court services. They do, however, provide exchanges services such as selling water and sewer services.

Those charged with governance of governments are usually elected by the local populace, though some are appointed. These elected officials are responsible to the people that put them in office. If citizens are not pleased with the actions of their elected officials, then they can replace those persons at the ballot box. Elections create accountability for the actions of governments.

Governments using the GASB standards often report their activities at the government-wide and fund levels. Government-wide financial statements include those for governmental activities and those for business-type activities such as water and sewer services. Funds are used to account for subsets of the government; those include governmental funds, special revenue funds, and debt service funds. Funds are also used to account for proprietary fund activity such as the sale of electricity or sanitation services.

The Government Accountability Office (GAO) provides Government Auditing Standards (GAS), commonly known as Yellow Book standards. Grant agreements, regulations, or laws can trigger the use of GAS in governmental audits.

The Uniform Guidance gives direction for the performance of Single Audits of federal funds by governmental auditors. The Office of Management and Budget (OMB) provides annual updates to the Compliance Supplement used in Single Audits. The Compliance Supplement provides the applicable compliance areas (e.g., allowability) for federal grants by assistance listing number.

opinion units
Auditing Local Governments

See How Opinion Units Affect Governmental Audit Planning and Opinions

Most governments have multiple opinion units requiring unique audit plans. Below, I explain how governments use two different measurements…

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GASB 100
Accounting GASB Local Governments

How to Address Accounting Changes and Errors with GASB 100

Does your government ever have accounting changes or error corrections? If yes, know that GASB 100, Accounting Changes and…

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governmental auditing standards
Auditing GAAS Single Audit Yellow Book

A Video Explanation of the Various Governmental Auditing Standards

If you perform governmental audits, you know that different governmental auditing standards can come into play. In this video,…

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deferred inflow and deferred outflow
Accounting Local Governments

Understand Deferred Outflows and Deferred Inflows in Governments (with Video)

GASB 63 and 65 provide guidance regarding deferred outflows and inflows in governments. This article provides an overview of…

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compensated absences
GASB

Compensated Absences Simplified: Navigating GASB 101 Requirements

GASB issued Statement No. 101, Compensated Absences, and updated the recognition and measurement guidance for compensated absences to better…

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Single Audit overview
Accounting and Auditing Single Audit

Understand Single Audits in Five Minutes: a Video Overview

Here’s a Single Audit overview in five minutes. This video provides an overview of what a Single Audit is…

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Segregation of Duties
Auditing Fraud

Segregation of Duties: How to Overcome

Segregation of duties is key to reducing fraud. But smaller entities may not be able to do so. Today,…

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Rita Crundwell
Asset Misappropriation

How a Simple Fraud Scheme Sinks a City: Rita Crundwell

Is it possible for one person to steal over $53 million from a city with an annual budget of…

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GASB 87 Lease Accounting
Accounting Local Governments

Keys to Understanding GASB 87 Lease Accounting Now

Are you looking for GASB 87 lease accounting information? Are you a government that leases assets? Then you’re in…

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Charles Hall

Charles Hall

I am a practicing CPA. I have primarily audited governments, nonprofits, and small businesses for the last forty years.

My sweet spot is governmental and nonprofit fraud prevention. I am the author of (1) Journal Entries Made Easy,  (2) The Little Book of Local Government Fraud Prevention, (3) Preparation of Financial Statements & Compilation Engagements, (4) The Why and How of Auditing, and (5) Audit Risk Assessment Made Easy. I frequently speak at continuing education events.

I consult with CPA firms, assisting them with auditing and accounting issues. Contact Charles

More About Me
  • Books
  • Media
  • Topics
Book: Journal Entries Made Easy, an Introduction to Accounting
Book: The Little Book of Local Government Fraud Prevention
Book: Preparation of Financial Statements & Compilation Engagements
Book: Audit Risk Assessment Made Easy: Seeing What Others Miss
Book: The Why And How Of Auditing: Auditing Made Easy
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