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Governmental accounting, to me, is the hardest section of FAR to understand.

It seems 1000x more complicated and convoluted than commercial accounting. For example, General fund appropriate to other funds; when those funds want to buy/pay for something (assuming they aren’t a Proprietary fund) they encumber their appropriations and when the invoice is received they reverse their encumbrance JE and make an expenditure/voucher payable JE… right?

With that being said, does it come as a surprise to anyone studying for FAR when the news reports stuff like this?

https://www.foxnews.com/politics/2012/04/03/lawmakers-aghast-over-report-lavish-conference-footed-by-taxpayers/?test=latestnews

If you don’t want to read the article, here is an excerpt:

“The chairman of the House transportation committee is calling for a hearing following a report that an obscure federal agency blew $820,000 on a conference near Las Vegas… The employees at the conference dropped thousands of dollars on luxury items and convention giveaways — including more than $6,000 on commemorative coins, $8,000 on a “yearbook” and $3,200 for an in-house mind reader.”

Bec: 8/31/12
Aud: 8/1/12
Reg: 76
Far: 73

[kmwgrace]

Re: the governmental portion of the exam – yes there's a lot to take in but my state requires a full 3 credit class in gov't acctg in order to sit for the exam so when I watched the Becker stuff it was review. All that to say, if you're still in school I recommend taking it. If not that'll make it tougher but when you break down the 3 types of funds & the characteristics of each it makes a little more sense.

~ Kate... MTX!
CPA exam on hold while I homeschool my 6 year old!

[jelly]

It's very very obscure, unless you deal with government accounting or budgeting. The extra step of encumbering and then reversing can be considered a consequence of the very political, ever fluid process, as well as internal controls.

The internal control comes from the fact that a government's budget is really a bunch of theoretical numbers on several computers, and cash expenditures is often on another set of computers. The gov't really doesn't know much cash it will collect from taxes and what it's exact bills are going to be, so it's all from guessing and budgeting. Whether in the red or black, a government agency simply needs to pay its bills, even if there's theoretically no cash left in the bank.

It's political in the sense that whoever is looking to spend a chunk of money must pretty much declare and tag it asap; it becomes even more vital if there are written contracts related to spending those funds, especially union contracts, etc.

Couldn't pass again!

[Author]

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