Essay, Research Paper: Government Accounting System

Legal Issues

Free Legal Issues research papers were donated by our members/visitors and are presented free of charge for informational use only. The essay or term paper you are seeing on this page was not produced by our company and should not be considered a sample of our research/writing service. We are neither affiliated with the author of this essay nor responsible for its content. If you need high quality, fresh and competent research / writing done on the subject of Legal Issues, use the professional writing service offered by our company.

On June 30, 1999 the GASB passed statement number 34. Statement
34 establishes new accounting requirements for state and local governments that
are scheduled to begin on June 15, 2002. There are three phases scheduled for
the implementation of statement 34, each depending on the size of the
government. The largest governments must meet the requirement first while the
smaller governments have more time to comply with the statement. Statement 34
will improve the governmental accounting system in many ways. First, statement
34 will create easier to understand financial statements. This will allow people
other than accountants to understand the information within a government
financial statement. Secondly, statement 34 will help city officials keep track
of fixed assets that need to be replaced or improved. This addition is important
because city officials often forget that assets have been in use for too long,
resulting in costly improvements that could be avoided. Furthermore, statement
34 will allow readers to determine whether the government has improved since the
last fiscal year. These goals will be accomplished in several ways. First, a
management discussion and analysis (MD&A) statement will be required. Within
this statement, managers will discuss the financial achievements of the
governmental entity during the fiscal year. In this discussion, managers will
compare the current and previous years-financial statements, and inform the
reader if there has been an improvement or deterioration financially. The
managers preparing the MD&A must also explain any significant fluctuation
within any major accounts, as well as, any future event expected to have a major
impact upon the said government. Another notable change made by statement 34 is
the adoption of the full accrual method. This will greatly change the bottom
line of many governmental entities. Under this system, governments will report
all revenues earned in a given period. This change will give financial statement
readers a better idea of the actual financial position of the government,
because all revenues earned within a given period will be reported. The full
accrual method will help government officials determine if citizens have paid
for the benefits that have been received and if the government’s financial
position has changed since the previous year. A third important change that
statement 34 will usher in is the way governments report activity in their major
funds. Governments will no longer report their funds in aggregate form. The new
model will reclassify funds into more specific individual fund listings. This
change will make it easier to track specific expenditures while increasing
government accountability. Another substantial change brought about by statement
34 is asset management. Governments currently record assets at the time of
purchase as expenditures. The new accounting model will force governments to
monitor their assets cost and value on an annual basis. This could prevent major
damage to government assets that could otherwise be neglected, such as sewers
and drainpipes. Governments are having mixed reactions concerning the
implementation of GASB No. 34. Some states, such as Wisconsin, have already
implemented the statement while others, hardly know it exists. The state
controller of Wisconsin is sending out a strong message, urging all states to
get an early start. Other states, such as Michigan, already use procedures
similar to those of statement 34. As a result, Michigan plans to have met the
requirements of statement 34 sometime in 2001. The larger states are under the
most pressure, given they have the most to do and the least time to accomplish
it. In most cases, in order to comply with statement 34 regulations, states will
have to create new accounting software. In addition, because of the new asset
management methods many states will have to value their existing assets. This
will require governments to create new data collection methods. Many governments
find the time constraints difficult, given the Y2K problem is still not fixed in
many states. Governments, especially the larger ones, must really be on top of
things to meet the time requirements of statement 34. In conclusion, GASB
statement No. 34 will improve financial reporting for state and local
governments in many ways. First, the reports will be easier to read and
understand. The management discussion and analysis will give people with little
or no accounting background a good idea of the financial position a government
is in. Secondly, the financial reports will be more accurate. Since the full
accrual method will be used, governments will report all revenues they have
earned. Finally, it will be easier to determine if government money is being
spent properly. The new fund system will provide specific information about
where money is being spent. Statement 34 will be a considerable improvement for
state and local governmental accounting.
Good or bad? How would you rate this essay?
Help other users to find the good and worthy free term papers and trash the bad ones.
Like this term paper? Vote & Promote so that others can find it

Get a Custom Paper on Legal Issues:

Free papers will not meet the guidelines of your specific project. If you need a custom essay on Legal Issues: , we can write you a high quality authentic essay. While free essays can be traced by Turnitin (plagiarism detection program), our custom written papers will pass any plagiarism test, guaranteed. Our writing service will save you time and grade.

Related essays:

Legal Issues / Gun Control
Some people are for new gun control laws, but I am one of the many that are against them. Now, it is impossible to pick up a newspaper or watch the evening news without being bombarded with the detai...
Legal Issues / Gun Control
The debate over gun control has developed into a very complicated issue. Several different groups have suggested limiting the use of guns and others have proposed to supporting free gun use. On one s...
Legal Issues / Gun Control
The idea of gun control and regulation is becoming more and more popular throughout the U.S., although it may still bring up resistance among some people. Guns are sort of a foundation of American cu...
Legal Issues / Gun Control
Americans are faced with an ever-growing problem of violence. Our streets have become a battleground where the elderly are beaten for their social security checks, where terrified women are attacked ...
Legal Issues / Gun Control
The Second Amendment to the Constitution states that, "A well-regulated militia, being necessary to the security of a free state, the right of the people to keep and bear arms shall not be infri...