Municipal Financial Reporting: Managing the Numbers
Public Budgeting and Finance, Volume 1, Issue 3, pages 56–61, September 1981
Posted: 21 Aug 2014
Date Written: Fall 1981
Corporate attempts at "managing" earnings have often involved the use of managerial judgment as to the appropriate event in the earnings cycle that is the critical one. In the municipal context, numerous opportunities exist to postpone or accelerate the outflow of liquid financial resources on a basis unrelated to the incurrence of the underlying expense (asset consumption). Further, revenues are usually not the outcome of an earnings process, but rather of the government's power to tax and are raised so as to meet a targeted amount of expenditure. In practice, therefore, revenue recognition has been tied to the accounting period in which, as per management's best judgment, the monies may be prudently spent. The result has been to provide the municipal finance officer with considerable leeway in reporting operating results.
Keywords: Governmental financial reporting, Managing the numbers
JEL Classification: M41, M42, M48
Suggested Citation: Suggested Citation