Government accountants and auditors work in the public sector to maintain and examine the records of government agencies and also to audit private businesses and individuals who pay taxes. Government accountants also audit entities subject to other government regulations, such as businesses providing contract services to the government or organizations receiving government grant money.
The goals of federal, state or municipal government agencies when applying the principals of accounting are different from the private sector's main business objective of earning profit. Budgets are among the most important considerations in government accounting since government agencies and other recipients of government money are fiscally accountable to tax payers and must demonstrate compliance with the intended uses of budgeted resources.
Two independent, private sector boards set the generally accepted accounting principles (GAAP) for government accounting:
The Federal Accounting Standards Advisory Board (FASAB) sets federal accounting standards. In October 1990, the Secretary of the Treasury, the Director of the Office of Management and Budget, and the Comptroller General of the United States created the FASAB to develop accounting standards and principles for the United States Government. These standards were designed to allow the Federal Government and its agencies to provide users of financial reports with understandable, relevant, and reliable information about each agency's financial position, activities, and the results of their operations.
In October 1999, the American Institute of Certified Public Accountants (AICPA) recognized FASAB as the board that sets generally accepted accounting principles for federal entities. The Board has nine members: one from each of the three above mentioned agencies that established the Board, plus six public or non-federal members. In developing accounting standards, the Board considers the financial and budgetary information needs of congressional oversight groups, executive agencies, and other users of federal financial information.
The Governmental Accounting Standards Board (GASB) sets accounting standards for state and local governments. In 1984, the Financial Accounting Foundation in partnership with associations representing state and local governments, established the GASB to set state and local accounting standards. The Board consists of seven experienced members knowledgeable of governmental accounting and finance whose responsibility it is to look out for the public's interest with regard to accounting and financial reporting. The Board follows a due process published in its Rules of Procedures and encourages public participation.
As of 1999, the GASB requires that state and local governments produce a government-wide statement of net assets and a statement of activities:
These statements use the accrual basis of accounting, meaning that revenues are recorded in the accounting period they are earned and become measurable, even if they aren't available for use, and measurable expenses are recorded in the period incurred.
According to the IRS, accounting professionals within the agency:
The IRS employs accountants working in a number of different capacities, including:
Government accounting is defined largely by the practice of fund accounting, which categorizes resources into funds to identify their source and allocation. Government accounting records are essentially a collection of funds. Each fund has a specific purpose, ranging from operating expenses to funding for a specific program. Each fund is an independently accountable entity where the basic accounting equation of Assets = Liabilities + Equity still applies.
In fund accounting the focus is on accountability rather than profitability. Segregating resources into funds helps with the control and monitoring of these resources while ensuring and demonstrating that an agency is meeting legal and administrative requirements. Many non-profit organizations also use fund accounting.
The three basic groups of funds in governmental accounting are:
Fund accounting uses modified accrual accounting in which four things happen:
Grant Accountants perform governmental audits to help ensure that the billions of dollars in grants, loans and loan guarantees, property, cooperative agreements, interest subsidies, insurance, food commodities, direct appropriations, and federal cost reimbursements awarded by the government every year are properly used by the recipients.
There are 26 federal grant-making agencies providing grants that support everything from education to agriculture, and from health and human services to arts and culture. Grants are made to state and local governments, education organizations, public housing organizations, non-profit organizations, businesses, and even individuals who are conducting research or developing and running programs that fall within the scope of a grant's purpose. Ultimately, these entities all must be able to show that they spent the grant money for intended purposes.
Government accountants generally have a minimum of a bachelor's degree in accounting or a related field with accounting classes. Some accountants may get started with an associate's degree. Some accountants may have a business or finance-related bachelor's degree with a master's degree in accounting or an MBA with an accounting concentration.
Someone interested in government accounting is well advised to take fund accounting or government accounting courses while getting a degree. Some schools offer a government accounting concentration as part of a bachelor's degree in accounting or business. Continuing education and certificate programs in fund accounting and government accounting procedures are also available.
Becoming a Certified Public Accountant (CPA) is considered something of a gateway to government accounting work and is, in fact, required for some roles. Additional specialty credentials for government accounting are available through a number of certifying agencies.
The Institute of Internal Auditors (IIA) offers a specialty certification called Certified Government Auditing Professional (CGAP). The exam for this certification covers the unique aspects of public sector internal auditing: fund accounting, grants, legislative oversight, confidentiality rights, and more. The educational requirements for this certification are a bachelor's or equivalent degree or an associate's degree plus five years of work experience in a government environment. In addition, applicants need two years of auditing experience in a government environment.
Another option is Certified Government Financial Manager (CGFM) from the Association of Government Accountants, an educational organization dedicated to enhancing public financial management. Certification requires a bachelor's degree from an accredited college or university and two years of professional experience in the government financial management field.
The following three exams for the CGFM cover the entire field of federal, state, and local government financial management:
Prior to June 2002, the National Association of Certified Valuation Analysts (NACVA) offered a certification called Government Valuation Analyst (GVA). That certification then became part of the Accredited Valuation Analyst (AVA) designation. However, the AVA requirements for government-employed valuators are different from the requirements for other AVA applicants and include:
Federal, state, and local governments employ accountants to make sure that revenues are received and expenditures are made in line with laws and regulations. Job roles may involve auditing, financial management, financial institution examination, or budget analysis and administration.
At the Federal level, agencies that accountants work for include:
At the state level, agencies that retain accountants include:
On a city or county level, accountants work for:
Private accounting firms that provide contract services to the government or that provide services to government contractors also retain accountants knowledgeable in government accounting.
Although government accounting salaries vary by geographic location, education, certification, and other factors, as of May 2014 the US Bureau of Labor Statistics (BLS) reported the average salaries for accountants and auditors working for local, state and federal government agencies to be:
According to a survey conducted by the American Institute of Certified Public Accountants (AICPA), about three percent of accounting program graduates with bachelor's degrees and another three percent with master's degrees begin their careers in government accounting.