Government

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.