Ggb 515 Task 1

To: PBA 515 Classmates

From: Tom Fullen

Re: Budget Transparency

Date: March 23, 2017

In Government it is a well-known fact, “there are no secrets”. Every public organization is accountable for their actions and their expenditures. Fiscal transparency is a critical element in today’s public financial management system. Transparency also provides a window into government budgets for citizens, helping to hold their leadership accountable. Transparency and honesty in government finance are so integral, in 1982 the U.S. Government established the Federal Managers Financial Integrity Act (FMFIA). An Act to amend the Accounting and Auditing Act of 1950 to require ongoing evaluations and reports of the adequacy of the systems of internal

As such, governments adhere to a different set of financial reporting and accounting standards. Governmental accounting and financial reporting standards help stakeholders assess how public resources were acquired and how resources are or will be spent. Accounting is a systematic reporting and recording of assets, liabilities, capital, income and expenditure. Because the public sector operates under a different environment then the private sector, government accounting is specific to the functions of the public sector. State and local governments follow the principles and guidelines developed by the Government Accounting Standards Board (GASB). Financial reporting provides decision makers with financial information they need to make informed decisions and is the responsibility of the administrator of the public funds. There are two types of financial reporting. Internal reporting, which is directed towards management and elected officials to provide them with financial information they need to manage the government daily. External reporting is designed to meet the needs of stakeholders without direct access to the information contained in the government accounting system, such as citizens, grantors, and oversight

A financial audit is an independent, objective evaluation of an organization 's financial reports and financial reporting processes. The primary purpose for financial audits is to give stakeholders reasonable assurance that financial statements are accurate and complete.

Most internal audits are not adding value. One reason is that “ongoing compliance burdens and pressure to do more with less” is contributing to the decline in perceived internal audit value. However, internal audits show findings and recommendations which act as a tool for department heads to take suitable corrective action and help in plugging the loopholes which would otherwise go undetected for a considerable period of time. The external audit lends credibility to the financial reporting process of state and local governments, and an essential element of that process is the independence of the external auditors from the governments they are auditing. Otherwise, those who use governmental financial statements cannot rely on the integrity and objectivity of the auditors’ report.