Demystifying Governmental Accounting, with Dean Mead

Sticking with that theme

of GAAP compliance, and particularly with smaller jurisdictions, lots of conversation these days about the value add of GAAP accounting for smaller jurisdictions.

There's a bill proposed here in Illinois, there's bills proposed elsewhere that would either roll back some of the GAAP reporting requirements for local governments or broaden the definition of what counts as GAAP reporting to not include the GASB's created GAAP.

All of this seems to stem from the basic idea that it's just too much to ask smaller jurisdictions to do GAAP-compliant financial statements.

Do you think we're asking particularly small governments too much? It took me 40 years to get to this

answer, which is maybe.

Definitive.

I mentioned before I started at a citizen research group and it is in my DNA to believe that if you get money like taxes that you didn't earn and that I didn't have any choice to give you, I want an accounting of that.

I want to know what you did with that money.

And I want you to demonstrate to me you used it efficiently and effectively.

That's a big ask.

I still feel that way.

Every property tax payment, every quarterly income tax payment to the federal government, I'm thinking about what is going to happen to that money and what they're going to do with it.

So there's a part of me that thinks that every government, no matter what its size is, is doing something to demonstrate.

This is how much we brought in.

This is what we did with it.

You know, I am cognizant of how small almost every government in the United States is.

If you add up all of the revenue of all 90-plus thousand governments in the census of governments, I think the top 10,000 represent 96% of all the revenue.

So 80 plus thousand are 3 or 4%.

So by definition, they are tiny.

Can any of those governments follow GAAP? No.

You know, it would be amazing if they could.

Most states don't require little governments to follow GAAP.

And in those that do, those governments are not preparing their financial statements.

They're hiring somebody else to do them.

Sticking with that theme

of GAAP compliance, and particularly with smaller jurisdictions, lots of conversation these days about the value add of GAAP accounting for smaller jurisdictions.

There's a bill proposed here in Illinois, there's bills proposed elsewhere that would either roll back some of the GAAP reporting requirements for local governments or broaden the definition of what counts as GAAP reporting to not include the GASB's created GAAP.

All of this seems to stem from the basic idea that it's just too much to ask smaller jurisdictions to do GAAP-compliant financial statements.

Do you think we're asking particularly small governments too much? It took me 40 years to get to this

answer, which is maybe.

Definitive.

I mentioned before I started at a citizen research group and it is in my DNA to believe that if you get money like taxes that you didn't earn and that I didn't have any choice to give you, I want an accounting of that.

I want to know what you did with that money.

And I want you to demonstrate to me you used it efficiently and effectively.

That's a big ask.

I still feel that way.

Every property tax payment, every quarterly income tax payment to the federal government, I'm thinking about what is going to happen to that money and what they're going to do with it.

So there's a part of me that thinks that every government, no matter what its size is, is doing something to demonstrate.

This is how much we brought in.

This is what we did with it.

You know, I am cognizant of how small almost every government in the United States is.

If you add up all of the revenue of all 90-plus thousand governments in the census of governments, I think the top 10,000 represent 96% of all the revenue.

So 80 plus thousand are 3 or 4%.

So by definition, they are tiny.

Can any of those governments follow GAAP? No.

You know, it would be amazing if they could.

Most states don't require little governments to follow GAAP.

And in those that do, those governments are not preparing their financial statements.

They're hiring somebody else to do them.