Monday, June 26, 2017

Unsung Heroes - Government Accountants

Source
When I was younger I thought of accountants as people who wore those green visors and sleeve garters whispering, "What do you want the numbers to say?"  
Then I did something I never dreamed I'd do.  I married one.

I don't think he's ever worn a green visor or a sleeve garter.  

My husband's profession certainly isn't exciting and thrilling like say if I was married to a bull fighter.  But we always have money in our account, food on our table, and our bills are paid.  And I never have to worry about him being gored to death.
Source

Although I do worry about him being bored to death.

Source
But he loves his profession and thankfully so do many other accountants.  But no one deserves more props than government accountants.  Why?  Because government accounting is complicated, confusing, and in my not so humble opinion, boring.

Just like with my household budget, I take for granted that government accountants are behind the scenes making sure that water comes out of my faucet, lights turn in in my house, and sewer lines take away, you know, what it is that sewer lines take away.

But do I have to just trust they are doing their job and hope for the best?  Thankfully, no.

Our government has a board that oversees that our city finance directors and accountants are doing their job.

It is the Governmental Accounting Standards Board.  But people just call it by it's acronym GASB (pronounced Gaz-bee).  They have a website full of resources in case you want to learn more about governmental accounting and how it works.  Or you know, if you have insomnia.  

Source

While this board is nonpartisan, it is traditionally run by a fiscally conservative Republican, even under a Democratic White House.  The current chair is the former State Auditor from Iowa.
David A. Vaudt

You know what his nickname was in Iowa?

"Taxpayer Watchdog"  



Which apparently is a thing.  Anthony Kuo is running for city council in Irvine and was endorsed by Orange County as a taxpayer watchdog for protecting their hard-earned taxpayer dollars, maintaining Irvine's high quality of life for families, and a healthy economy as the County of Orange's Chief Accounting Officer.

Good job, Anthony! 

I'm glad to know we've got a taxpayer watchdog at the GASB helm.


The GASB requires your city to produce what is known as a CAFR.  And like all government acronyms, it does stand for something (Comprehensive Annual Financial Report) but like all government acronyms, it too has become its own word, pronounced "calf-er."

One way to think of a CAFR is like this:

The city budget asks the question "How do you intend to spend the money?"

The CAFR answers the question by saying, "Here is how we spent the money."  


Did you know that CAFRs are available to the public?  Don't feel bad, most people don't.  But thankfully, other people do.

Different groups looks at CAFRs for different reasons.  One such group is the Government Finance Officers Association.  Their job is to spend 4 to 6 months poring over the CAFRs to determine whether they can receive a Certificate of Achievement for Excellence in Financial Reporting.

Here is Homer, Alaska's:
Good job, Homer!
Why should you care about GFOA's Certificate of Achievement for Excellence in Financial Reporting?

I'm glad you asked, I'll tell you.

In 1945, GFOA established this certificate to encourage transparency and full disclosure to the citizens who pay the taxes and receive the services from the government.  They wanted to see cities and states go beyond the minimum required of generally accepted accounting principles or GAAP.  This acronym is pronounced "GAP" like the store.

Source

only not as nicely dressed.
Do you think any of these guys will become an accountant?  

While you don't need to spend 4 to 6 months poring over your city's financial reports like GFOA does, you can look to see if your city's CAFR is certified.

But that's not all.  

There are others who look at the CAFR too.  These are finance groups like Moody's Investor Service or S&P (Standard & Poor's). They want to know what kind of credit risk the city or state is and the likelihood they'll pay back a bond.  Each entity is given a rating.  This is Moody's scale.  

Source 

Obviously a city would want a rating of Aaa.  But wouldn't it be fun to have a rating of Baa?
Do have any money?  Yes sir, yes sir, three bags full.  (Except we are a moderate credit risk and may possess certain speculative characteristics.)
 The CAFR and how a city spends their money is just one factor that is used to determine a credit rating.  Lots of other factors are used for analysis.  To learn about Moody's process, click here.  To find out how S&P does their rating system, click here.  

So another way to see how your city's finances are doing is to find out what its credit rating is.

The next time you are at a cocktail party and you ask someone what they do for a living and their reply is "I'm an accountant for the government."  Give them a warm thank you.

They are doing more than you'll ever know--more than you'll ever want to know.
Source


Dying to know more about CAFRs?  Click here to learn how government accounting is different than corporate accounting.