The three types of governmental accounting are:
1. Fiduciary Fund Accounting
Fiduciary funds accounting focuses on tracking and reporting financial information for specific funds or account groups. Each fund is treated as a separate accounting entity with its own set of self-balancing accounts.
Fiduciary accounting is used to ensure the proper management and accountability of public funds, as well as to comply with legal and regulatory requirements.
2. Governmental Fund Accounting
Governmental accounting, also known as government-wide or entity-wide, provides a view of the financial activities and position of the entire government entity. It consolidates the financial information from all funds and accounts into a single set of financial statements.
Government-wide accounting is designed to provide a broader perspective on the financial performance and overall financial health of the government. It includes statements of net position, activities, and cash flows, which are prepared using the accrual basis of accounting, similar to the private sector.
This ensures that all of the government's assets and liabilities, including long-term and capital assets and liabilities, are accounted for in the financial reports.
3. Proprietary Fund Accounting
Proprietary accounting is used for government-owned business activities that are operated similar to commercial enterprises. This type of accounting is used for activities such as utilities, transportation systems, and other revenue-generating operations.
Proprietary accounting follows accounting principles similar to those used in the private sector, focusing on the measurement of revenues, expenses, assets, and liabilities associated with these business-type activities.
These three types of accounting work together to provide a comprehensive financial picture of governmental entities, allowing for effective financial management, accountability, and reporting.