Chairman – William Holder, University of Southern California
Chairman-Elect – Michael Granof, University of Texas
Secretary – Abe Simon, Queens College of CUNY
Past Chairman – W.A. Broadus, U.S. General Accounting Office
Research – Rob Ingram, University of South Carolina
Education – K. Rao, ??
Newsletter – Mort Dittenhofer, Association of Government Accountants
Membership – Ron Points, U.S. General Accounting Office
Regional Coordination – Michael Granof, University of Texas
Papers Presented at 1981 Annual Meeting
“A Summary and Overview of Political Processes and Urban Fiscal Strain,” Terry N.
Clark and Lorna C. Ferguson, University of Chicago
“A Possible Program for Governmental Accountants,” James. G. Fox, James Madison
“A Study of the Need for Broader Curriculum Coverage of Governmental Operational
Auditing in Colleges and Universities,” Leonard Eugene Berry, Georgia State
Papers Presented at Regional Meetings
No information is available
Abstracts of Public Sector Research
In the winter of 1981, the Research Committee issued, in newsletter format, a publication
entitled Abstracts of Public Sector Research – American Accounting Association. This was intended to be a continuing activity to “assist members in keeping abreast of new iresearch and forthcoming publications in public sector accounting.” However, only one additional edition was forthcoming. This publication contained an abstract of eight
published articles and a bibliography thirty six articles on municipal bond research
(compiled by Shari Brown, University of Houston). The eight articles were:
“Making Sense of Nonbusiness Accounting, Robert N. Anthony, Harvard Business
Review, May-June, 1980, pp. 83-93
“Municipal Financial Statements: The Waterville Valley Model,” Robert N. Anthony,
The Accounting Forum, December, 1979, pp. 60-71
“Nonbusiness Financial Reporting: Is There Enough Guidance,” Robert N. Anthony,
Journal of Accountancy, August, 1980, pp. 48-54
“A Governmental Accounting Standards Board is not Needed,” (working title), Robert
N. Anthony, The Government Accountants Journal, forthcoming
“Local Government Accounting: Standards Conceptual Issues, and R&D Activities,”
James L. Chan, Urban Affairs Papers, Spring, 1980, pp. 19-25
“Standards and Issues in Governmental Accounting and Financial Reporting,” James
L. Chan, Public Budgeting and Finance, March, 1981
“Tests of the Relevance and Reliability of Municipal Accounting Information,” Ronald
M. Copeland and Robert W. Ingram, Working Paper, University of South Carolina,
“Municipal Accounting Information and Voting Behavior,” Robert W. Ingram and
Ronald M. Copeland, The Accounting Review, forthcoming, October, 1981
Working Paper Series
No working papers were issued during 1980-1981
The 1981 Annual Meeting of the AAA will have a special session entitled “Structure for
Setting State and Local Government Financial Accounting and Reporting Standards.” Presenting will be John C. Burton, Robert K. Mautz, and Robert J. Freeman.
Rob Ingram (Chairman of the Research Committee) established a subcommittee to
respond to the proposal to establish a new Governmental Accounting Standards Board.
The Committee will not be speaking officially for the AAA. Members include William
Holder (University of Southern California), John Engstrom (University of Georgia),
Robert Ingram (University of South Carolina), and Emerson Henke (Baylor University). th (Note from Historian – Bill Holder and John Engstrom testified at the hearings May 4thand 5 in Philadelphia. The section’s response was generally positive, whereas the AAA
Executive Committee’s response, given by Joe Silvoso, was generally negative.
Events in the Government/Nonprofit World During the Year
A new edition of the Government Auditing Standards was issued by the U.S. General
Accounting Office. This is the first revision of the standards originally issued in 1972.
The original Standards for the Audit of Governmental Organizations, Programs,
Activities, and Functions was prepared by a working group under the direction of Mort
Dittenhofer and assisted by Bob Freeman and Lennis Knighton. The new edition was
prepared by Bill Broadus. All are members of the Public Sector Section. The revision
provided for three elements of expanded scope auditing: (1) financial and compliance, (2) iieconomy and efficiency, and (3) program results.
The General Accounting Office issued an exposure draft of “Elements of Accounting and Financial Reporting in the Federal Government.” This was described as a first step in the
development of a conceptual framework for federal government accounting. This ED,
along with a previously reported “Objectives of Accounting and Financial Reporting in the Federal Government” was developed by Ron Points, a member of the Public Sector iiiSection.
The AICPA issued a proposed audit guide, Audits of Certain Nonprofit Organizations, which covers all nonprofit organizations not covered under existing audit guides.
Donald L. Scantlebury of the GAO reported that several groups are working to draft a
charter and to develop a Governmental Accounting Foundation that would fund a ivGovernmental Accounting Standards Board. The Summer, 1981 Newsletter reported the death of Mr. Scantlebury.
OMB issued several documents relating to the single audit approach. These included (1)
Attachment P to Circular A-102 (Single Audit of Grants), (2) Guidelines for Financial
and Compliance Audits of Federally Assisted Programs (written by GAO), (3) Cognizant
Agencies for Federal Audits of Grants, (4) Compliance Guide Audits of Federally
Supported Grants, and (5) Agency Achievements and Initiatives in Strengthening Cash
Senator Thomas Eagleton recently introduced a bill, The Financial Integrity Act of 1980, designed to strengthen the internal accounting and administrative controls maintained by
the Federal Government. The bill, co-sponsored by Senator Percy of Illinois and Senator
Mathias of Maryland, would require: (1) an annual report stating an opinion on the
agency’s system of internal control, (2) the preparation of guidelines by the Comptroller
General and the Director of OMB to make that assessment, (3) identification of material
weaknesses or inadequacies, and (4) agency inspectors general to investigate allegations
of false or misleading information.
The Fall, 1980 issue of the Newsletter reported a State Government Accounting Project,
funded by NSF, conducted by Relmond P. Van Daniker. The study was to develop
preferred accounting practices for state governments. A number of papers were issued as
a part of the project.
The 1980 edition of Government Accounting, Auditing, and Financial Reporting was published by the Municipal Finance Officers Association. Unlike the 1968 edition, this
edition is not considered GAAP; its authoritative status is thus limited to the credibility
that a user would assign to such a publication.
“The Government Accounting Standards Board Organization Committee met on January 12, 1981 in Atlanta, Georgia and voted to release an exposure draft of the committee’s
recent report. The report set forth recommendations and conclusions relative to the need
for the Board, organization, financing, Membership, location, and concepts of v The Spring, 1981 Newsletter provided more detail. The report indicated that operations.
there should be a separate independent government accounting standards board with a
separate independent Government Accounting Foundation. The Financial Accounting
Foundation opposed the concept and raised questions regarding the need for a separate
standards setting board, the ability of such a board to raise necessary funds, and conflict
between standards between FASB and the new standards setting board.
The GAO established a new Accounting and Financial Auditing Group within the
Accounting and Financial Management Division. The Group will be responsible to (1)
perform financial statement audits of Government corporations and other entities, (2)
developing a conceptual framework of accounting and financial reporting in the Federal
Sector, (3) revising and keeping current the GAO Auditing Standards (the yellow book), viand (4) revising and keeping current GAO’s Accounting Standards (Title II).
The American Society for Public Administration is considering adding a section on
government and business.
FASB published a study, “Reporting of Service Efforts and Accomplishments
Information,” which was conducted by Paul K. Brace, Robert Elkin, Daniel D. Robinson, and Harold I. Steinberg of Peat, Marwick, Mitchell & Co. The study analyzed 120
performance reports published by six types of nonbusiness organizations – colleges and universities, hospitals, human service organizations, state and local governmental units,
trade and professional associations, and philanthropic foundations. Left open was the viiquestion as to whether such reporting should be a part of annual financial reporting.
NCGA issued Interpretation 2, Segment Information For Enterprise Funds, requiring note disclosure of individual activities of nonhomogeneous enterprise funds. It also
added a project to see if FASB Statement 35 should apply to state and local governments.
The AICPA issued SOP 80-2 on Accounting and Financial Reporting by Governmental
Units, which amends the 1974 audit guide Audits of State and Local Governmental Units. This SOP incorporated NCGA Statement 1 Government Accounting and Financial
Reporting Principles in place of the 1968 provisions.
Standard & Poors published an article, “Who’s Watching the Books,” which reflected a
policy statement that an analyst must take into consideration the type and quality of
reporting when evaluating credits. All financial statements submitted to S&P must be in
accordance with GAAP and be audited by a CPA firm or a qualified independent state or
local agency. S&P will consider the absence of GAAP reporting and of auditing as viiinegative factors and will not make a rating.
For the first time, the Winter, 1981 Newsletter mentioned the National Intergovernmental
Audit Forum. The October, 1980 meeting reported that a Single Audit Implementation
Steering Committee had been formed. Also reported from the meeting were a document
on quality review of auditors, a position statement on auditor independence, and the fact
that OMB and GAO had jointly issued (for the first time) a GAO Standard Audit Guide
for Financial and Compliance Audits.
OMB issued Circular A-122, Cost Principles for Nonprofits, which applied to grants,
contracts and cooperative agreements between the institution and Federal Government
agencies. Excluded were hospitals, colleges, state and local governments and a selected
group of 33 nonprofit research organizations.
Peat Marwick Mitchell claimed the first single audit under OMB Circular A-102
President Regan is considering eight people for possible appointment as the next
Comptroller General of the United States. These are: (1) James F. Antonio (State Auditor
of Missouri), (2) Charles A. Bowsher, (Arthur Andersen), (3) Harvey Kapnick (former
Chairman of Arthur Andersen), (4) Marshall T. Mays (former chairman of the Overseas
Private Investment Corporation, (5) John R. Petty (President of the Marine Midland Bank
in New York), (6) Frank S. Sato (former Inspector General of the Department of
Transportation, (7) John M. Thomas (former Assistant Secretary of State), and (8)
Charles J. Zwick (president of Southeast Banking Corporation).
Senator Williams introduced legislation that would establish a new Institute for State and
Local Government Accounting and Reporting Standards.
Representative Jack Brooks introduced a bill entitled The Federal Managers
Accountability Bill of 1981 which would require the GAO to establish standards for
agencies to evaluate their systems of internal control, the head of each agency to report to
the President as to the adequacy of the agency’s system of internal control, the Inspector
General of each Agency to investigate any allegations of false or misleading information
in connection with the agency’s system of internal control, and requests for
appropriations to be accompanied by a certification by the Comptroller General that the ix agency’s internal control system has been approved.
The FASB passed SFAS 43 on Compensated Absences, which applies to nonprofit
organizations, except for state and local governments. The FASB also issued Concepts
Statement No. 4, which sets forth the objectives of general purpose external financial
reporting by nonbusiness organizations. Until the process of determining standards
setting authority for state and local governments, the FASB deferred a decision as to
whether the standards would apply. However, FASB stated that it is “aware of no
persuasive evidence that the objectives in this Statement are inappropriate” for general xpurpose external financial reporting by state and local governments.
The NCGA has started a conceptual framework project for local government accounting
The 1982 Budget prepared by OMB uses Zero Based Budgeting for the fourth time.
The NCGA named Frank L. Greathouse as its new chairman. Approved for release were
discussion memoranda on accounting and financial reporting for pension plans of
governmental units, accounting and reporting for joint ventures, and a definition of the
reporting entity. Later in the year, an ED on capitalization of interest costs was issued.
The Association of Government Accountants (AGA) completed its Common Body of
Knowledge study, headed by James Fox of James Madison University.
The International City Management Association published a handbook, Evaluating Local
Government Financial Condition, which provides a straightforward approach to
monitoring the financial health of local governments.
Resources on File
Newsletter, Public Sector Section, Volume 5, No. 1 (Fall, 1980)
Newsletter, Public Sector Section, Volume 5, No. 2 (Winter, 1981)
Newsletter, Public Sector Section, Volume 5, No. 3 (Spring, 1981)
Newsletter, Public Sector Section, Volume 5, No. 4 (Summer, 1981)
Abstracts of Public Sector Research, American Accounting Association, Volume 1
Number 1 (Winter, 1981)
iAbstracts of Public Sector Research-American Accounting Association. ii Newsletter, Volume 5, No. 1 (Fall, 1980) iii Ibid. iv Ibid. v Newsletter, Volume 5, No. 2 (Winter, 1981) vi Ibid. vii Ibid. viii Ibid. ix Newsletter, Volume 5, No. 3 (Spring, 1981) x Ibid.