Research Case— Federal Financial Reporting Objectives. Statement of Financial Ac

Question

Research Case—

Federal Financial Reporting Objectives. Statement of Financial Accounting Concepts 1, “Objectives of Federal Financial Reporting” at (http://www.fasab.gov/pdffiles/handbook_sffac_1.pdf) identifies accountability and decision usefulness as the fundamental values of federal governmental financial accounting and reporting. The statement identifies four groups of users to whom the government owes accountability and the possible needs of each user group.

Required

Briefly describe the user groups, their needs for information, and how these tie into the four objectives of federal financial reporting identified in the statement.

Explanation / Answer

The four objectives of Federal Financial Reporting are:

Budgetary Integrity

Federal financial reporting should assist in fulfilling the government's duty to be publicly accountable for monies raised through taxes and other means and for their expenditure in accordance with the appropriations laws that establish the government's budget for a particular fiscal year and related laws and regulations. Federal financial reporting should provide information that helps the reader to determine

• how budgetary resources have been obtained and used and whether their acquisition and use were in accordance with the legal authorization,

• the status of budgetary resources, and

• how information on the use of budgetary resources relates to information on the costs of program operations and whether information on the status of budgetary resources is consistent with other accounting information on assets and liabilities.

Operating Performance

Federal financial reporting should assist report users in evaluating the service efforts, costs, and accomplishments of the reporting entity; the manner in which these efforts and accomplishments have been financed; and the management of the entity's assets and liabilities. Federal financial reporting should provide information that helps the reader to determine

• the costs of providing specific programs and activities and the composition of, and changes in, these costs;

• the efforts and accomplishments associated with federal programs and the changes over time and in relation to costs; and

• the efficiency and effectiveness of the government's management of its assets and liabilities.

Stewardship

Federal financial reporting should assist report users in assessing the impact on the country of the government's operations and investments for the period and how, as a result, the government's and the nation's financial condition has changed and may change in the future. Federal financial reporting should provide information that helps the reader to determine whether

• the government's financial position improved or deteriorated over the period,

•future budgetary resources will likely be sufficient to sustain public services and to meet obligations as they come due, and

• government operations have contributed to the nation's current and future well-being.

Systems and Control

Federal financial reporting should assist report users in understanding whether financial management systems and internal accounting and administrative controls are adequate to ensure that

• transactions are executed in accordance with budgetary and financial laws and other requirements, consistent with the purposes authorized, and are recorded in accordance with federal accounting standards;

• assets are properly safeguarded to deter fraud, waste, and abuse; and

• performance measurement information is adequately supported.

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