A Good Accounting System--A Key to Good Management

The Budget and Accounting Procedures Act of 1950 required the Comptroller General to prescribe accounting principles and standards which executive agencies were to follow in their accounting systems. Formal approval is granted to systems that conform to these standards, but, at present, 40 percent of eligible government systems have not been approved. Most serious deficiencies that have been disclosed in government accounting involve unapproved systems. There has been progress by agencies with defective systems to make the necessary improvements to receive approval. Some reasons for the large number of unapproved systems are: frequent changes in top management; failure of accountants to convince agency management that better accounting is worthwhile; lack of strong support by the Office of Management and Budget for obtaining improvements; and lack of followup by Congress on the degree to which policies are put into practice by agencies. The approval process takes place in two steps: the agency's statement of accounting principles and standards is approved if it conforms to that of GAO; and the accounting system design is approved if it is in accordance with the principles and standards.