Federal Government Reporting
The U.S. Constitution Article I, Section IX mandates “a regular statement and account of the receipts and expenditures of all public money shall be published from time to time” by the federal government.
Two centuries after the publication of the U.S. Constitution, it is still difficult for the federal government to issue financial statements.
In this assignment, you examine the U.S. Federal Government's financial statements to explore the differences in these statements from other governmental financial statements and the reasons that necessitate these differences.
Instructions
Write a 3–5 page paper in which you do the following:
Discuss at least three unique characteristics of the federal government that necessitate special accounting and reporting practices, presenting at least one example for each transaction.
Choose at least three unique characteristics of the federal government that necessitate special accounting and reporting practices.
Discuss these characteristics, presenting at least one example for each one.
Accurately identify and explain the type of audit performed, the audit opinion issued, and the auditor's reasons for that opinion, on the most recent federal government financial statement.
Each year the federal government issues an “official” comprehensive financial report that covers all its activities and is subject to audit.
Review the most recent Financial Report of the United States Government.
Explain the type of audit performed, the audit opinion issued, and the auditor’s reason for that opinion. (Auditor’s opinion is last item on Table of Contents).
Identify all eight of the financial statements presented by the federal government and the relevance of each one's contents to a financial statement user.
In reviewing the federal government’s financial statements, you will observe more basic financial statements than were required by GASB for the local governments or by FASB for not-for-profits.
Identify each financial statement presented by the federal government and the relevance of the statement’s content to a financial statement user.
Express an opinion on whether the selected financial statement met its objectives, correctly identifying the objectives, justifying the opinion with three relative pieces of data from the Financial Report.
Congress enacted the Government Performance and Results Act of 1993, which requires federal agencies to develop strategic plans, operational objectives, and measures of performance, reporting on the extent to which the agency met its objectives.
Select one of the federal government reporting entities included in the Financial Report of the United States Government, and express an opinion on whether it is meeting its objectives. Justify your opinion with at least three pieces of data from the reporting entity’s Financial Report (reporting entities are listed in Appendix A).
Use at least three quality sources to support your writing. Choose sources that are credible, relevant, and appropriate. Cite each source listed on your source page at least one time within your assignment.
Federal Government Reporting
Three Differences and Transaction Instances
While all financial statements follow the Generally Accepted Accounting Principles (GAAPs), the federal government's financial statements have additional standards they need to follow, making them slightly different. These are the accounting standards espoused by the Government Accounting Standards Board (GASB). One may then ask why the need for additional measures and yet all the actions are intended to promote a transparent and inclusive process that provides valuable information. The answer is that GASB is designed explicitly for state and local government agencies within the United States as it defines three different reporting methods for government accounting.
Moreover, similar to other entities, the federal government issues three statements for its reporting purposes. Two opinions are the same: a statement of activities and a Statement of Cash Flows. The difference arises in the third statement where, while Non-profit companies state their financial position, the government issues a Statement of Net Position and shows a summary of assets and liabilities that affect taxpayers and other interested stakeholders in the government. An instance of such is when the government, as later shown in the types of financial statements, reports for entities such as the Military, and or spending of war which is not usually reported in other financial statements.
Additionally, the nature of reporting for government accounting reports slightly differs from other state agencies and commercial organizations owing to regulatory obligations. For every year, government organizations must put together a Comprehensive Annual Financial Report, which shows the overall financial health of the state entity and is put together using GAAP and GASB(McDonough,2022). It often includes comprehensive financial data, information on specific funds, and the results for the period in question, in this case, the financial year ending 2020. The CAFR also includes a budget report showing the actual spend vis a vis the budgeted amount. This is another instance of difference whereas as compared to commercial entities, where the financial reporting occurs to show what level of profit was made and special attention drawn into what drove the performance.
Type of Audit Performed, Opinion issues, and Reasons for those issues.
According to a report by a government agency (Government Accountability Office), a financial statement and a related financial audit were conducted on the federal government's released financial statements, giving an opinion of whether the reported financial condition, the results and use of resources are presented fairly under-recognized accounting criteria as espoused by Generally Accepted Accounting Principles as well as Generally Accepted Government Auditing Standards (GAGAS).
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The audit opinion issues expressed regarding the above-audited statements are in part due to:
* The agency cited serious concerns in financial management at the defense department as well as small business administration.
* Huge unresolved differences in balances between federal agencies
* Serious identified weaknesses in the process of preparing the financial statements
The issues are highlighted in the backdrop of various findings, mainly underscoring certain material weaknesses in internal control over financial reporting and other limitations resulting in conditio...