Transparency and accountability
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Democratic processes such as transparency and accountability are essential principles for any government of the present day. Transparency ensures the available information in the US can measure the performances of the authorities. It controls and safeguards the country from abuse and misuse of powers. It is through transparency that we acquire accountability. Accountability ensures that everyone in power can be held responsible for their actions. Thus, through this demand, there has been a broader civic engagement which involves working together to make a civic change. As a result, there has been a combination of knowledge, values, skills and motivation essential for making a difference. Therefore, this has improved the quality of public services, quality of civil services and the degree of its independence.
In the US, several bodies have were formed to ensure there are up to date financial reports. These kinds of reports promote transparency and accountability, thus keeping the leaders and the involved parties on toes and ultimately responsible. Such bodies include; international accounting standards board (IASB), the international organization of securities commissions (IOSCO), financial accounting standards (FASB), US Securities and Exchange Commission (SEC) and convergence of global financial reporting standards. These bodies are responsible for setting financial reporting of the government (Vian 2020). These bodies work towards the harmonizing of international accounting standards based on their principles. They also work towards achieving improved market regulation and facilitating border listings. Therefore, the financial reports summarise the important financial accounting information of the US.
With the state government, local government, the federal government and non-profit organizations in the discussion, there are several objectives to be put in comparison. Objectives of the financial reports of the local and federal government are; examining cash usage, cash flows, state’s performance and the financial health of the state. Through the financial reports of the local government, which is solely answerable to the federal government, cash usage can be easily examined. Resources allocated for various projects are clearly shown in the report. The local government can monitor cash flows in the state through the financial reports. Thus, helping to determine the state’s performance and the financial condition of the state. Therefore, the federal government uses the reports from the local governments to carry out follow up activities on the disbursed funds.
Moreover, a non-profit organization also has its objectives utterly different from the local and federal governments’. In a non-profit organization, the primary purpose of this financial report is to track and analyze the income and revenues of the organization (Chowdhury 2019). Unlike the local and federal government where the man source of income is from taxes, non-profit organizations get their incomes from findings and donations. Thus, the financial report indicates how this income is used up in the government and organization, respectively. Therefore, their financial reporting provides a clear manifestation of how the funds are used.
External financing involves the providing of shareholders and potential investor with well-documented reports. Income statement contains the revenue earned by the state in a given period. All sources of income generation contained in this report and thus help the government to differentiate each source categorically. Balance sheet encapsulates assets and sets them equal to liabilities. Whatever the state owns and how the finances are used to operate it are contained in this in section. Cash flow statements act as a record of the funds entering and leaving the state. Therefore, these form the backbone of balance sheets where all available and used resources are put into accountability.
Major activity categories in a state or local government include; governmental activities, business-type activities and fiduciary activities. Governmental activities refer to all the programs and services associated with the land and bypass any governmental authority. Governmental funds are used to account for all the programs carried out and sponsored by the taxes, grants and similar revenue resources. Accounting involved ensures the financial business of a country is efficient, reliable and timely. Business type activities involve operating, investing and financing. State government ensures cash flows accountability used in each of these activities can be well accounted for. Therefore, fiduciary activities are assets which a federal state administers to non-federal individuals. Thus, they show some level of care for their clients responsible for promoting diligence to ensure all activities are to the best interest of the clients.
Based on their differences, there is a huge financial difference between state government, the federal government and non-profit organizations. Financial reports of a state and the federal government include the income statements, statements of cash flows and revenue allocation (Rathinam et al., 2019). At the same time, reports of a business organization involve the balance sheets and the and a statement of stockholders equity. These organizations differ from business organizations in that business organizations are aimed at conducting businesses and making profits. Thus, other organizations are aimed at creating consistency and reliability.
The objective of a financial reporting system in a state is to ensure there is relevance, understandability, timeliness, comparability, reliability and consistency. While in a federal government, the financial reports help to answer vital questions on the aspect of financial activities of different states. Both internal and external stakeholders get an accurate and comprehensive snapshot of the metrics needed to make crucial state decisions. In a non-profit organization, financial reports are used to show the usage of the donations and contributions clearly. Therefore, sources of reporting for a state are the accountability of different projects while sources of reporting for a business organization are how the company allocates its revenue.
References.
Vian, T. (2020). Anti-corruption, transparency and accountability in health: concepts, frameworks, and approaches. Global Health Action, 13(sup1), 1694744.
Chowdhury, N. (2019, September). An IoT and blockchain-based approach for ensuring transparency and accountability in regulatory compliance. In Adjunct Proceedings of the 2019 ACM International Joint Conference on Pervasive and Ubiquitous Computing and Proceedings of the 2019 ACM International Symposium on Wearable Computers (pp. 957-962).
Rathinam, F., Cardoz, P., Siddiqui, Z., & Gaarder, M. (2019). Transparency and Accountability in the Extractives Sector: A Synthesis of What Works and What Does Not. 3ie International Initiative for Impact Evaluation, Working Paper, 33.