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Government accounting

I discovered a new news source this past week called Digital Journal which purports to be the newspaper of the future — online and produced by freelance journalists around the world. It has no particular political bias that I can see. I mention this only because yours truly has decided to try his hand at blogging on the Digital Journal’s website. You are welcome to read my efforts at http://digitaljournal.com/user/398137/blog/
What I am hoping to do is to stay out of the “political” debate itself but to try to add some “technical expertise” in hopes that it will inform the debate. I am deeply troubled these days by the talk about the need to “balance the budget,” the size of the federal “debt,” and so on. These are very important issues that threaten the very foundation of the United States. But what very few commentators in the press seem to understand is that the government keeps its books on a completely different basis to the business. If corporations kept their books the way government does and were required to balance their budgets, we would drive them all out of business. So a very serious problem is confused by misunderstandings.
I teach government accounting. The sad part is that I teach it to a small handful of advanced graduate accounting students who have to do some governmental accounting for the CPA exam. If you are not a Masters of Accounting student then you will hear nothing about how the government keeps its books. We graduate hundreds of thousands of BBA’s and tens of thousands of MBA’s each year. Yet not one will have even the slightest smattering of knowledge about how government accounting works. And not just federal government accounting: I have yet to find a student who has ever read the financial report produced by their own city. They have NO idea — and nor do their parents — of how their own city spent or mis-spent the property tax money that they received. It is a sad state of affairs.
This is not a partisan political issue. We can continue to bang one another over the head as to whether Planned Parenthood is a good or bad thing. All that I wish for is that people understand the mechanics of the system. Then we would be arguing over real stuff — really important stuff — instead of flailing away over what are really non issues. Anyway that’s what that blog is about.

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