Government by statute or under not for profit corporation laws are governmental if they posses one more of the following chateristics: their officers are popularly elected or a controlling majority of their governing body is appointed or approved by governmental officals, they possess the power to enact and enforce a tax levy, they hold the power to directly issue debt whose interest is exempt from federal taxation, or they face the potential that a government might dissolve them unilaterally and assume their assets and liabilities. Not for profit organization characteristic- receive contributions of significant amounts of resources from resource provider who do not expect equivalent value in return, operate for purposes other than to provide goods and services at a profit, and lack ownership interests like those of a business enterprise. Not for profit organization do not enage in ownership-type transaction, such as issuing stock and paying dividend. Not for profit organization are most time of voluntary health and welfare, health care, college / universities, and other. Governmental Accounting standards board (GASB) setting body for state and local government. Organizational purposes – they generally try to accumulate a reasonable surplus of financial resources to cushion against economic contraction to provide for emergency needs. But they do not operate to maximize inflow over outflows. The challenge to financial reporting leis also in demonstrating accountability for the resources entrusted to these organizations. When used in the broad sense of the term, accountability embraces not only probity nd legal compliance, but also efficiency in delivering services and effectiveness in accomplishing probram results. GASB want them to do outputs and outcomes reports. Sources of Revune and relationship – government get most from taxation. Investors can sell equity securities. Potential for longevity- because of the power to tax and the nature of their services, general-purpose governmetns rarely go out of business and are not bought and sold like business enterprise. Role of the Budget and legal requirements most of the resources obtained by government entities come from taxes, higher level government grants, and borrowing. Spending decisions made by the federal government, states, and general-purpose local government are based on budgets that have the force of law. Budgetary appropriations typically can’t be exceed without specific legislative approval. Generally, resources provided by higher-level government must be used only for the specific purpose designated by the government. Most governmental borrowing are constrained by law as to purpose, quanity and timing. Many not for profit org. derive most of the resources from donor contribution, maybe to restriction to what they can be used for , when they can used or must be maintained in perpetuity. User and uses of accounting information- resources providers, oversight bodies, and service recipents are the major external users of governmental and not for profit entity financial reports. Resource provides include taxpayer: donors and potential donors; investors, potential investors, and bond-rating agencies; and grant providing org. Objectives of Financial reporting- State and local government: GASB statement. To meet objectives, need to provide data to show whether current- year revenues were sufficeient to pay for current- year service, to demonstrate whether resources were obtained and used in accordance with the legally adopted budget and help users assess the enity’ service effeort, cost and accomlishments. Federal government- Federal accounting standards advisory board (FASAB) objective for federal financial reporting cover budgetary integrity, operating performance, stewardship, and systems and controls. Should assist in fulfilling the government’s duty to be publicly accountable for monies raised through taxes and other means and for...
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