Accountants' Handbook Volume Two: Special Industries and Special Topics, Eleventh Edition

Chapter 34. STATE AND LOCAL GOVERNMENT ACCOUNTING

Andrew J. Blossom CPA

KPMG Peat Marwick LLP

Andrew Gottschalk CPA

KPMG Peat Marwick LLP

John R. Miller CPA, CGFM

KPMG Peat Marwick LLP

Warren Ruppel CPA

DiTomasso & Ruppel, CPAs

INTRODUCTION

The rapid changes that have occurred in the environment of state and local governments during the past few years have prompted sweeping changes to governmental accounting practice and theory. The evolution of governmental accounting and reporting standards has made great strides since the formation of the Governmental Accounting Standards Board (GASB) and the Single Audit Act of 1984. Related to the changes is greater scrutiny by federal and state agencies as they begin to realize the importance of audit quality in the governmental environment. Governmental enterprises are no longer the "shoebox" operations imagined by many people. Rather, government is a large business—a very large business. Officials in government need to be and are much more sophisticated now than similar personnel were only a few years ago. In other words, the increasing complexity of the governmental environment, the increasing demands for public accountability, and the challenges and opportunities that face today's governments require accounting systems that provide fast, accurate, and timely information to the government's decision makers.

Going forward and dealing with the challenges of issues like deteriorating infrastructure, an aging workforce, and public health care, including ...