Governmental Accounting: Fund Flow or Service Cost?

Abstract Expansion in state and local government operations has been one of the most significant features of the U. S. economy in the postwar period. State and local expenditures for goods and services climbed to 51 billion in 1961 approximately 10% of gross national product and are rising at the rate of 6% per annum. This growth has been attended by increasing criticism of governmental accounting, particularly published reports. As part of a governmental accounting project conducted at the University of Hawaii Bureau of Business Research, the published reports of the fifty states was examined. It was found that only 20 per cent of the states present a statement in which revenues and expenses are combined for all funds. Reports range in length from three to 142 statements, and generally present no comparative data. None show the cost of services rendered. It is impossible to obtain vital information from even the best of the state reports. Hawaii is one of three states distinguished by the National Committee on Governmental Accounting Certificate of Conformance, for example, its reports do not disclose something as important as the cost of education.