Governmental accounting THE THEORETICAL FRAMEWORK OF GOVERNMENTAL ACCOUNTING

Governmental accounting

THE THEORETICAL FRAMEWORK OF GOVERNMENTAL ACCOUNTING What is the governmental activity? Governmental activity ranges from a full ownership and management of all the production and services activities, to being restricted to performing some necessary servicing activities

The Main Characteristics of the Governmental units: 1 -Governmental Units, in General, do not seek or aim at realizing profits. 2 - The Absence of the Competition Incentive: 3 - In the Governmental Units, there is no direct relationship between revenues and expenditure: -Governmental Units are subjected to legal restrictions: 5 The Governmental Units properties are publicly owned

The Definition of Governmental Accounting “. . a set of principles, rules and procedures which govern the collection, analysis, recording, classifying, summarizing and presenting of the financial information of the governmental units, which are related to the collection of the State’s resources or the expenditure, with the aim of tightening control on them and providing information which would help in the precise preparation of the State’s public budget”.

The Objectives of Governmental Accounting: 1 - The evaluation of expected revenues and expenditures and the ascertaining and evidencing the actually realized revenues and expenses by the governmental unit. 2 -The disclosure of the soundness of the collection and expenditure operations regarding their agreement with the impositions of the laws, regulations and procedures.

4 Disclosure of the financial and economic results of the governmental units’ activities and programs, in terms of complying with the expenses of these activities and programs, and the achieved outputs. 5 The achievement of an effective administration control which would secure the sound implementation of the activities and programs. 6 - Providing information that would assist in the planning of governmental activities and their relative decision-making.

The Distinctive Characteristics of Governmental Accounting: • The Accounting Entity the economic body according to whose point of view accounting processes are conducted. allocated funds “resources allocated for the performance of specific tasks in the light of specific restrictions imposed by the laws, regulations and instructions, to which are subjected the governmental departments”. -role of accounting in the governmental units has been focusing on showing the extent of the public units’ obligation to spend the amounts allocated for them, for the purpose determined for them as well.

2)The Bases of the Accounting Measurement of revenues and expenditures: 3) Fixed assets and depreciation in the governmental units: 4) Reserves and provisions in the governmental units: 5) Inventory adjustments at the end of accounting year: 6) Long-term obligations in the governmental units:

The features of the accounting system in the governmental units: a. Documents in all the governmental units follow a standardized form and their filling-in is governed by documentary cycles which usually achieve some objectives. b. The governmental units rely on a unified set of ledgers and accounting books which are governed by a unified set of accounting cycles.

c. The financial reports in the governmental units are prepared in the form of uniform models, and according to fixed rules which are determined by the financial laws and regulations. D. The governmental accounting system aims to showing the extent to which the governmental unit has complied with what has been indicated in its budget