Understanding Government Accounting Principles and Systems

What is Government Accounting?

Government accounting is the discipline dealing with the economic and financial study of public finance for assessing the administration of the state. It encompasses a set of principles, standards, and procedures used to implement transactions in monetary terms of public authorities to prepare their financial statements to see their economic and financial situation.

Objective of Government Accounting

To measure the performance and results of public management.

Importance of Government Accounting

In addressing the government's management, it acquires significant importance because, based on the economic and financial information provided by the state, knowledge of the budget outturn is achieved. The information provided by government accounting is of paramount importance for the officials and executives of public sector entities of both the central and regional administration, as well as for the control of citizens and legislators.

Government Accounting System

A set of principles and standards including operational levels, accounting areas, source documents, reports of movements by area, chart of accounts, books and records, assistant and principal accounting, budgetary financial statements, and records of transactions.

Scope of the System

It is implemented in all public sector bodies responsible for the raising of financial resources and those who assume the implementation of public services and investments.

Characteristics of the Government Accounting System

1. Unit Box: Provides that financial resources should meet in a common fund to finance the expenditure. The main purpose of this principle is to obtain information on the flow of public funds through the book and the cash required subsidiary ledger bank.
2. Simultaneity and Parallelism Accounting: The operations carried out by public bodies are recorded in accrual accounting and budgetary accounting. All transactions recorded in the real financial accounting process are parallel for both budgetary accounting records at the same time and with the same documents in different sources but accounting areas.
3. Required Treatment of Accounts Payable and Budget Commitments: The system establishes the obligation of registering as accounts payable and as the corresponding budgetary commitments required before making payment and budget execution.