What Is Governmental Accounting, and What Makes It Unique?

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For aspiring accounting professionals, the field of governmental accounting can be rewarding and engaging.

If you’re curious about this profession, here you’ll find answers to a range of questions, from “What is governmental accounting?” and “How do you keep up with government accounting standards?” to others about the job outlook and earning potential in this field. You’ll also discover how an online master’s degree in Accounting can prepare you for this challenging role.

A governmental accountant works at a laptop.

What Is Governmental Accounting, and Why Is It Different?

Governmental accounting is a set of unique accounting systems, standards, and processes that support the needs of local, state, and federal governments and their various agencies.

As a report by the Governmental Accounting Standards Board (GASB) explains, governmental accounting differs from for-profit accounting out of necessity: “Governments are fundamentally different from for-profit business enterprises in several important ways. Their organizational purposes, processes of generating revenues, stakeholders, budgetary obligations, and propensity for longevity differ. These differences require separate accounting and financial reporting standards in order to provide information to meet the needs of stakeholders to assess government accountability and to make political, social, and economic decisions.”

Governments have a different operating environment that presents its own unique considerations. For instance, instead of acquiring and spending funds received from customers or clients as a for-profit company would, governments collect and spend tax dollars in what are known as non-exchange transactions with citizens. This structure places a much greater emphasis on public accountability.

Moreover, threats like liquidation, competition, and profitability may be pressing concerns for a private sector organization, but are significantly less relevant in government contexts. Factors that matter more to governments include long-term stability, ability to consistently cover annual expenses and debts, and stewardship of public funds.

What’s the Difference Between Government Accounting and For-Profit Accounting?

The unique needs of government organizations mean that the key responsibilities of a government accountant will differ from those of certified public accountants serving for-profit organizations. With that in mind, what is governmental accounting work like in comparison to for-profit accounting work?

Certain aspects of the role will be similar across both sectors. For instance, all accountants work with financial information related to income and expenditures and will generate financial statements for key stakeholders across the organization. However, the emphasis in governmental accounting is on supporting public accountability as well as governmental decision-making, rather than increasing profits.

According to The CPA Journal, governmental accounting requires an interdisciplinary approach as well as knowledge and experience in the following areas:

  • Auditing
  • Accounting and financial reporting
  • Public policy
  • Public administration
  • Public financial management and budgeting
  • Information systems
  • Relevant laws and regulations
  • Ethics

For instance, in governmental financial management, budgets are legal documents, not merely flexible roadmaps to driving profitability, The CPA Journal notes. Additionally, government accountants use specific accounting practices, including:

  • Encumbrance accounting
  • Modified accrual accounting
  • Full accrual basis of accounting

How Do You Keep up with Governmental Accounting Standards?

Governmental accounting professionals follow a different set of accounting standards than others in the field. Generally accepted accounting principles (GAAP) are upheld by accountants in all sectors. In addition, accountants working outside the for-profit sector will follow the frameworks set out by industry standards boards. For instance, nonprofit organizations follow GAAP as well as the guidelines set out by the Financial Accounting Standards Board (FASB).

Governmental accounting professionals, however, align their practices with GAAP in addition to the frameworks established by an independent non-governmental organization known as the Governmental Accounting Standards Board.

As a sister organization to the FASB overseen by the Financial Accounting Foundation (FAF), the GASB sets accounting standards and financial reporting standards for professionals working in government settings.

As the organization states, “The GASB standards are recognized as authoritative by state and local governments, state Boards of Accountancy, and the American Institute of CPAs (AICPA). The GASB develops and issues accounting standards through a transparent and inclusive process intended to promote financial reporting that provides useful information to taxpayers, public officials, investors, and others who use financial reports.”

What Are the Benefits of Becoming a Government Accountant?

For many aspiring professionals, having an opportunity to serve the public can be a benefit in its own right. Working in a government accounting position can mean stepping out of the corporate profit-and-loss mindset and into something bigger than oneself.

In a government role, an accountant’s ultimate focus is on how to ensure that the agency or department they work for is the best possible steward of public trust and tax money. Moreover, the accountant’s hard work pays off in facilitating projects and other efforts dedicated to improving the public good.

Competitive salaries and extensive benefits packages also make the role of governmental accountant appealing. Government employees may have access to robust health insurance coverage, substantial retirement matching plans, and other perks such as federal student loan forgiveness and public transportation subsidies.

The interdisciplinary nature of a governmental accounting role can also be an exciting and rewarding part of the job. Accountants working in smaller agencies may take on a wider range of responsibilities than their counterparts in large corporate settings, or participate in team-based projects and activities.

Another advantage of government employment over for-profit work is that the government workweek is typically less demanding. Agencies generally follow standard working hours and employees are usually not expected to work tirelessly at all hours or put in additional time over the weekend. This can be a major advantage for accounting professionals seeking a better work-life balance.

How Much Do Government Accountants Earn?

The average salary for federal government accounting professionals is $114,553, according to FederalPay.org and based on 2018 data from the Office of Personnel Management. Pay rates have steadily increased over the years, with the average salary rising from $83,282 in 2004.

A government accountant’s salary can vary widely depending on the agency they are employed by as well as their experience level. In federal accounting, for instance, FederalPay.org notes that the starting pay is roughly $34,000, while the maximum pay is about $143,000.

In state and local governments, government accountant earnings can vary based on a range of factors. However, accounting is widely regarded as a well-compensated profession. According to the United States Bureau of Labor Statistics (BLS), the median annual salary for accounting and auditing professionals across all sectors was $71,550 in May 2019. The lowest 10% of earners made $44,480 whereas the highest 10% earned more than $124,450.

Where Can You Work as a Government Accountant?

According to the BLS, 8% of all accounting and auditing professionals work in government settings. Governmental accounting professionals can find employment at the local, state, and federal levels. Any government agency that needs to track the flow of money can benefit from the expertise of a government accountant.

Some government agencies and departments rely on the talents of several hundred accountants. For instance, according to FederalPay.org, the Securities and Exchange Commission employed 910 accountants in 2018, while the Veterans Health Administration employed 518 accountants and the Federal Bureau of investigation employed 499. Smaller agencies, like the Federal Maritime Commission and the Office of Labor-Management Standards, employed just one or two accountants.

What Is the Job Outlook in Governmental Accounting?

The CPA Journal notes that there is an “urgent need” for qualified governmental accounting professionals. This is primarily due to the fact that a large portion of the workforce will be retiring throughout the 2020s.

The accounting profession at large is also expected to grow at a steady rate, according to the BLS. Between 2019 and 2029, total employment for auditors and accountants is forecasted to increase by 4%, reaching nearly 1.5 million jobs by 2029.

On-the-job learning is critical in the governmental accounting specialization, so the current high demand is a good sign for anyone eager to break into the niche. Aspiring accounting professionals can expect to have various opportunities to enter the workforce, and potentially land in the governmental accounting specialization early on in their careers. However, actual job market prospects will vary from one location to another.

How Do You Get a Government Accounting Job?

Given the high demand for government accountants, it may be possible to enter the profession with a bachelor’s degree. However, The CPA Journal emphasizes that undergraduate experience is not enough to truly prepare for the challenges and nuances of governmental accounting.

Completing an online master’s degree in accounting is a great way to get in-class and real-world exposure to the profession. Students who pursue an online graduate accounting degree through the University of Alabama at Birmingham’s Collat School of Business have the opportunity to take courses that can directly prepare them for governmental accounting. One example is an intensive three-credit core course called Governmental and Not-for-Profit Accounting.

UAB’s online master’s degree in accounting program also allows students to take a deep dive into accounting practices and principles through a two-part Principles of Accounting sequence as well as a three-part Financial Accounting progression. In as few as five semesters, online students can complete the rigorous accounting program and transition into the workforce.

Study Governmental Accounting Online Through UAB

Now that you’re familiar with the answer to the question of “What is governmental accounting?”, it’s time to consider whether it could be the right career for you. To learn more about this profession and how an online master’s degree in accounting from UAB can help you prepare for it, connect with an enrollment advisor today.

Recommended Readings:

Accounting in the Government and Nonprofit Sectors

Top Skills You Need To Pursue a Career in Accounting

Sources:

GASB, Why Governmental Accounting and Financial Reporting Is — and Should Be — Different

The CPA Journal, Urgent Need for Governmental Accounting Education

BLS, Accountants and Auditors

FederalPay.org, Accountant — Federal Salaries of 2018

GASB, About the GASB