NCJ Number
69951
Journal
Journal of Accountancy Volume: 108 Issue: 5 Dated: (NOVEMBER 1959) Pages: 55-59
Date Published
1959
Length
5 pages
Annotation
REVENUES, BUDGETARY REQUIREMENTS, AND ACCOUNTING PROCEDURES OF LOCAL GOVERNMENTS ARE EXAMINED. UPDATED ACCOUNTING STANDARDS ARE RECOMMENDED.
Abstract
THE PROBLEMS FACING LOCAL GOVERNMENT ARE TRACED TO THE POPULATION EXPLOSION AND THE CONCOMITANT DEMAND FOR THE EXTENSION AND EXPANSION OF SERVICES SUPPLIED BY LOCAL GOVERNMENTS. MOREOVER, COSTS INCLUDE INCREASED WORK FORCE AND HIGHER SALARIES FOR PUBLIC EMPLOYEES WITH THE REQUIRED TECHNICAL KNOWLEDGE OR SKILL. A COROLLARY TO THIS STRUGGLE IS THE SEARCH FOR SOURCES OF REVENUE. LOCAL GOVERNMENTS MUST RELY PRINCIPALLY ON REAL ESTATE, LOCAL INCOME, SALES, AND PER CAPITA TAXES (IN STATES PERMITTING LOCAL GOVERNMENTS TO IMPOSE SUCH LEVIES). SMALLER AMOUNTS ARE GLEANED FROM A VARIETY OF TAXES ON TRANSACTIONS, OCCUPATIONS, PRIVILEGES, AND PROPERTY. INTERNAL CONTROL, SUCH AS RECONCILING DUPLICATE RECORDS AND ACCOUNTS, BILLING OF TAXES, AND ACCRUAL ACCOUNTING, IS OFTEN LACKING. OTHER ACCOUNTING WEAKNESSES INCLUDE THE MALDISTRIBUTION OF ITEMS WITHIN A FUND (INTENTIONAL OR CARELESS) WHICH RESULT IN MISMANAGEMENT OF CASH, INVENTORY, AND FIXED ASSETS. FINANCIAL REPORTS OF LOCAL GOVERNMENTS FREQUENTLY LACK ACCURACY, COMPLETENESS, CONCISENESS, CLARITY, AND PROMPTNESS. TO REMEDY THESE PROBLEMS LOCAL GOVERNMENTS SHOULD ESTABLISH AN OPERATIONAL PROFILE AS WELL AS THE EFFECTS OF ANY PROPOSED ACTION ON THESE OPERATIONS AND ON THE GOVERNMENTAL UNIT'S FINANCIAL POSITION. INDEPENDENT AUDITING IS NEEDED TO VERIFY ACCOUNTING PROCEDURE AND TO DETECT FRAUD IN GOVERNMENT. A CHART OF ACCOUNTS IS NECESSARY TO CORRELATE AND INTERPRET INFORMATION ON A COMPARABLE BASIS (RECOMMENDED BY THE NATIONAL COMMITTEE ON GOVERNMENT ACCOUNTING). IMPROVING INTERNAL CONTROLS, HIRING COMPETENT GOVERNMENT ACCOUNTANTS, AND REDUCING THE COST OF THE ACCOUNTING FUNCTION ARE SUGGESTED. THE ACCOUNTANT'S COMMUNITY RESPONSIBILITY IS DISCUSSED.