Budgeting and Forecasting, Accounting and Financial Reporting

Budgetary Accountability: Why, Why, Why?

Page from April 2021 issue of GFR

“No taxation without representation!” is a rallying cry upon which the United States of America was founded. The U.S. Constitution and the equivalent for each state delegate the power of taxation to the legislative branch of government, notably the branch that most directly represents citizens as constituents. “Management by committee” not being the most efficient, however, the day-to-day operation is largely controlled by the executive branch of governments at all levels.

How, then, to make that representation of the people meaningful and effective in determining what government does with tax money? This is accomplished by means of legally adopted budgets. By law, budget appropriations both permit and constrain the spending of public dollars. And how do legislators and citizens alike know that government managers abide by these laws? By virtue of governments issuing reports demonstrating compliance, upon which users know they can rely.

The centrality of the need for budgetary accountability has had a profound effect on government accounting, and it helps explain the high value GFOA places on budgetary compliance reporting. So, this is why government accounting is “different.”