![]() ![]() ![]() Indeed, some questioned whether it was constitutional for a legislative agency to define accounting standards for an executive agency. ![]() Several agencies adopted those standards, but the Office of Management and Budget (OMB) did not require agencies to do so. GAO subsequently published such standards as “title 2” of its Policies and Procedures Manual for the Guidance of Federal Agencies. The Budget and Accounting Procedures Act of 1950 had provided for the Government Accountability Office (GAO) to set accounting standards for federal agencies. The CFO Act did not define the source or nature of the “applicable standards.” As part of the work preceding passage of the CFO Act, it was necessary for the relevant parties to agree on a mechanism for defining those standards. Many individuals and organizations, including the Association of Government Accountants and the American Institute of Certified Public Accountants (AICPA), contributed to this “good government” initiative. Even so, it was reasonable to hope that the discipline imposed by the process of preparing and auditing such statements could help to reduce the frequency and size of such problems. Of course, accountants, auditors, and congressional staff who were knowledgeable about financial management understood that audited financial statements do not preclude the possibility of fraud and other financial management problems. Congress passed the CFO Act in part due to concerns about highly publicized financial management problems at various federal agencies. It was a step toward the comprehensive requirement for audited financial statements established in 1994 by the Government Management Reform Act. In 1990, Congress passed the Chief Financial Officer’s Act (CFO Act), requiring audited financial statements, in accordance with applicable standards, for selected federal reporting entities. Additional Changes Resulting from GAAP Designation and Subsequent Sunset Reviews (1999 – 2010). ![]()
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