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Introduction

Government

A government is a group of people elected by the community to make decisions on
behalf of the people in the community interest. When the government makes decisions, they
are called laws. The laws are contained in books called legislation and each book is called an
Act of Parliament.
Without governments, people would be unclear about their rights and responsibilities
to other people. There would be no road rules; no parks and libraries; factories could be built
next to houses; cars could park anywhere; and shops could sell food which might make you
sick.
A government is a body that has the authority to make and the power to enforce laws
within a civil, corporate, religious, academic, or other organization or group.


Accounting

It is a systematic process of identifying, recording, measuring, classifying, verifying,
summarizing, interpreting and communicating financial information. It reveals profit or loss
for a given period, and the value and nature of a firm's assets, liabilities and owners' equity.
Accounting can be described as a way to communicate the financial health of a
business or an organization to any and all interested parties. It is a way of assessing the
assets, liabilities and cash flow, or the future of an entity for all current and future investors.
It is the lifeblood of a business and all types of business have basic information that is
recorded to get that job done.

Governmental accounting
Governmental accounting is an umbrella term which refers to the various
accounting systems used by various public sector entities.
Public sector accounting refers to the field of accounting that specifically finds
application in the public sector or government. A special field of accounting exists because: -
The objectives to which accounting reports to differ significantly from that for which
generally accepted accounting practice has been developed for in the private (business)
sector; and - The usage of the results of accounting processes of government differs
significantly from the use thereof in the private sector.
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Methodology

The Qualitative Method investigates the why and how of decision making, not just what,
where, when. Hence, smaller but focused samples are more often used than large samples.

Quantitative Method refers to the systematic empirical investigation of social phenomena
via statistical, mathematical or computational techniques. Quantitative data is any data that is
in numerical form such as statistics, percentages, etc.

In this term paper, we use Qualitative Method.




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Government Accounting Practices
Generally, the basis of accounting used by governments is the modified accrual basis
which falls between the cash and accrual bases. Transactions are generally recognized when
they occur (similar to the accrual basis), but the timing of the ultimate cash receipt or cash
disbursement may have an impact on when the transaction is recorded (similar to the cash
basis). Under the modified accrual basis, revenues are recognized when they are measurable
and available (Ripple, 2004). Revenues are measurable when they are reasonably estimated
and available means that the revenue is collectible within the current period or soon enough
thereafter to pay liabilities of the current period (60 days of the end of the current period).
The measurement focus refers to what the government entities are trying to measure when
they prepare the financial statements. The economic resources measurement focus is based on
whether the entity is economically better off or worse off as a result of the events and
transactions that occurred during the fiscal period being reported. It is used by funds that
undertake business-type activities. The current financial resources measurement focus is used
only by governmental funds. In the governmental units and governmental type funds the
focus is on the resources available for spending and the liabilities that are to be paid during
the current period. Financial statements prepared using the current financial resources
measurement focus reflects changes in the financial resources available in the near future as a
result of transactions and events of the fiscal period being reported. Increases in revenues are
reported as revenues or other financing sources and decreases in spendable resources are
reported as expenditures or other financing uses. The use of fund is an important tool for
governments to demonstrate their legal compliance with the lawfully permitted use of
resources. Fund accounting for governments was developed in response to the need for
governments to be fully accountable for their collection and use of public resources (Hay,
1989; Rupple, 2004). The financial statements of a government are prepared in accordance
with generally accepted accounting principles (GAAP) and Governmental Accounting
Standards Board (GASB) requirements. They include information reported on a government-
wide basis. Chow (2004) introduced Whole of Government Accounting (WGA) as a means to
improve government ability to manage the economy and that (WGA) style reporting
strengthens accountability to Parliament, government, planners, taxpayers and managers as a
result of improved accounting information disclosure. (Ramadhan, 2009)

The government generally used accrual basis accounting in their accounting system.
They also used cash basis accounting. When transaction is occurred, the timing of the
ultimate cash receipt or cash disbursement may have an impact on when the transaction is
recorded. Under the modified accrual basis, revenues are recognized when they are
measurable and available. Revenues are measurable when they are logically estimated and
available means that the revenue is collectible within the current period or soon enough
thereafter to pay liabilities of the current period. The activity focus refers to what the govt.
entities are attempting to live once they prepare the money statements. The economic
resources activity focus is predicated on whether or not the entity is economically
comfortable or worse off as a results of the events and transactions that occurred throughout
the financial amount being rumored. Its employed by funds that undertake business-type
activities. This money resources activity focus is employed solely by governmental funds.
Within the governmental units and governmental sort funds the main target is on the
resources obtainable for defrayment and also the liabilities that square measure to be paid
throughout this amount. Money statements ready mistreatment this money resources activity
focus reflects changes within the money resources obtainable within the close to future as a
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result of transactions and events of the financial amount being rumored. The financial
statements of a government are prepared in agreement with generally accepted accounting
principles (GAAP) and Governmental Accounting Standards Board (GASB) requirements.
They include information reported on a government-wide basis. Introduced Whole of
Government Accounting (WGA) as a means to improve government ability to manage the
economy and that (WGA) style reporting strengthens accountability to Parliament,
government, planners, taxpayers and managers as a result of improved accounting
information disclosure.

Based on the findings, certain accounting reforms for development and improvement
are highlighted in the previous section. In this regard, it is recommended that the accrual
basis should be introduced. During the last 10 years, accrual based accounting and financial
reporting have been introduced in many countries governments (e.g. UK, Sweden, New
Zealand and Finland). Further, the use of performance and program budgeting in line with
line-item budgets is worthwhile for effective control on government expenditure and
accountability. This is in addition to the establishment and maintaining of a contingency
reserve fund. (Ramadhan, 2009)

In light of the discoveries, certain bookkeeping changes for improvement and change
are highlighted in the past segment. In this respect, it is suggested that the gathering support
ought to be presented. Throughout the most recent 10 years, accrual based bookkeeping and
monetary reporting have been presented in numerous nations' governments (e.g. UK,
Sweden, New Zealand and Finland). Further, the utilization of execution and customize
rationing in accordance with line-thing plans is beneficial for viable control on government
consumption and responsibility. This is notwithstanding the stronghold and supporting of a
possibility store fund.

The political-economic model developed in this study from existing economic and
political theories provides a plausible explanation for state government accounting disclosure
choices based on the standard goodness-of-fit criteria for structural equation models with
latent variables. Relationships are consistent across models and years for the causal effect of
socioeconomic development (DIV) on interest-group strength (IGS); the causal effect of
interest-group strength (IGS) on governor strength (GOV) and bureaucratic
accounting/auditing ability (ABIL); the causal effect of political competition (PC) on
governor strength (GOV); and the causal effect of bureaucratic accounting/auditing ability
(ABIL) and the press (PR) on state government financial reporting choice (QUAL12). The
model developed to explain 1986 financial disclosure practices is also significant for 1978. In
1978, governor strength (GOV), debt market influence (DC), and bureaucracy
size/complexity and financial ability (BIA) are also significantly related to extent and quality
of financial disclosure. Perhaps the most significant feature of this study is that it applies the
study of political markets to accounting choice. Our understanding of the incentives of
nonmarket decision makers (Mueller 1979, p. 3) in an accounting context is limited. A
more complete analysis of the political environment is accomplished in my study through the
use of the LISREL simultaneous estimation of a system of structural equations. Applying
such an analysis, similar to that applied in other public-choice studies, is important to our
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increased understanding of this political process. Important principal agent relationships in
the political setting not previously addressed in an accounting context are identified as well.
In addition to exploring the political process in more depth than prior accounting studies, my
paper has built on Ingrams (1984, p. 134) work by updating an inventory of accounting
practices by state government and by sorting out the multi co linearity of the political and
economic variables. Many of the LISREL findings are consistent with regression results of
prior accounting research. The models are also able to represent the complex relationships
between the theoretical constructs and indicators in much more detail than previous research.
The additional relationships studied will contribute toward our understanding of state
government accounting choice. (Cheng. 1992)

The political-budgetary model improved in this study from existing monetary and
political hypotheses gives a conceivable clarification for state government bookkeeping
divulgence decisions dependent upon the standard goodness-of-fit criteria for structural
mathematical statement models with inactive variables. Relationships are predictable
crosswise over models and years for the causal impact of socioeconomic improvement on
vested party quality; the causal impact of vested party quality on representative quality and
bureaucratic accounting/auditing capability, the causal impact of political rivalry on senator
quality and the causal impact of bureaucratic accounting/auditing capacity and the press on
state government money related reporting decision. Maybe the most critical characteristic of
this study is that it applies the investigation of political markets to bookkeeping decision. A
more finish examination of the political environment is proficient in my study through the
utilization of the LISREL synchronous estimation of an arrangement of structural
mathematical statements. Applying such an investigation, comparable to, to the point that
connected in other open decision studies, is essential to our expanded comprehension of this
political procedure. Critical chief operator relationships in the political setting not formerly
tended to in a bookkeeping connection are distinguished simultaneously. Notwithstanding
investigating the political process in more profundity than earlier bookkeeping studies, my
paper has based Ingram's work by upgrading a stock of accounting practices by state
government and by sorting out the multi co linearity of the political and budgetary variables.
Large portions of the LISREL discoveries are reliable with relapse comes about of former
bookkeeping exploration. The models are likewise fit to speak to the intricate relationships
between the hypothetical develops and pointers in significantly more detail than past
examination. The extra relationships considered will commit to our comprehension of state
government accounting choice.


Education is the pillar for modern complex accounting systems. It has been
established that there is a positive relationship between education level and the competence
of professional accountants (Gernon, Meek, & Mueller, 1987). The adoption of IAS is a very
strategic and critical decision; it requires a high level of education, competence, and expertise
to be able to understand, interpret, and then make use of these standards. Highly qualified
accountants and well-trained users must exercise professional judgment and process complex
information (Doupnik and Salter, 1995; Street, 2002). In fact, it is expected that, in countries
where the education level is low and expertise is weak, there is a real barrier to the adoption
of IAS.
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Thus the second hypothesis: Hypothesis no. 2. The probability that a developing
country will adopt IAS is positively tied to its education level. (Zeghal et al, 2006)

I agree with it. Education is playing a vital role in accounting system. It makes
positive relation between education level and the competence of professional accountants. he
adoption of IAS is a very strategic and critical decision; it needs a high grade of learning,
competence, and know-how to be able to realize, interpret, and then make use of these
measures. Highly qualified accountants and well-trained users should workout professional
judgment and method complex data. In fact, it is anticipated that, in countries where the
learning level is reduced and know-how is weak, there is a genuine barrier to the adoption of
IAS. The probability that a developing homeland will adopt IAS is positively joined to its
learning level.

The existence of a capital market is considered one of the key factors in a country's
economic development because of its role in the optimal allocation of resources among the
different economic sectors and among firms within each sector. Quality accounting
information is a major ingredient in the development and efficient functioning of a capital
market. According to Gray, McSwenney, and Shaw (1984), the pressures exerted by investors
are important; investors require quality financial information in order to be able to make
optimal choices when they analyze investment opportunities. In some cases, they can lead a
country's accounting-standards-setting body to reform its accounting system and eventually
adopt IAS.
In countries with a capital market, the standards-setting bodies tend to establish sophisticated
accounting systems in order to guarantee the production and disclosure of quality financial
information that will be potentially useful for investors in making their decisions (Adhikari &
Tondkar, 1992). More specifically, Chamisa (2000) analyzed the role of IAS in improving the
quality of financial information produced for the capital markets in developing countries.
Accounting information, and particularly financial statements, remains a major resource for
capital-market investors in developing countries because of the scarcity and, in many cases,
the absence of other reliable sources of information. (Zeghal et al, 2006)

The existence of a capital market is advised one of the key factors in a country's
financial development because of its function in the optimal share of assets amidst the
different financial parts and amidst firms within each sector. Quality accounting data is a
major component in the development and effective functioning of a capital market.
According to Gray, McSwenney, and Shaw, the stresses used by investors are important;
investors need value economic data in alignment to be able to make optimal alternatives
when they investigate buying into possibilities. In some cases, they can lead a country's
accounting-standards-setting body to restructure its accounting scheme and finally adopt IAS.
In nations with a capital market, the standards-setting bodies are inclined to establish
sophisticated accounting schemes in alignment to guarantee the production and disclosure of
value economic data that will be potentially useful for investors in making their conclusions.
More specifically, Chamisa investigated the function of IAS in improving the quality of
economic data produced for the capital markets in developing nations. Accounting data, and
especially economic declarations, remains a foremost asset for capital-market investors in
developing countries because of the shortage and, in numerous cases, the absence of other
dependable sources of data.
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Government Accounting Practices in Bangladesh

The Public Sector emerged as the driver of economic growth consequent to the
industrial revolution in Europe. With the advent of globalization, the public sector faced new
challenges in the developed economies. Public sector management is one of the basic
elements of Bangladeshs governance structure with the aim at achieving greater efficiencies
in governmental operations, reduce corruption and system losses.
However in practice, the public sector has encountered governance issues to prevent
rampant corruption, causing significant wastage of national resources. Public financial
management is an integral component of the overall management process in the country. It
plays a significant role in the economic, efficient and effective use of public resources.
Therefore, high quality public sector financial management, incorporating high quality
accounting and auditing practices are indispensable for national economic growth. Public
Sector Accounting and Auditing are necessary for proper procurement of Government
resources; supply of goods and services through formation of budgets; recording and
reporting of assets and liabilities; and Keeping proper records for preparation of accounts and
presentation of financial information for decision making purposes.

Maintaining Government Accounts
The Comptroller & Auditor Generals (Additional Functions) Act, 1974 and
Comptroller & Auditor Generals (Additional Functions) (Amendment) Act, 1975 provide
CAG with the responsibility of keeping accounts of the Government. The Act was
promulgated under clause (3) of Article 128 of the Constitution, which states that the
Parliament may require the CAG to exercise such functions, in addition to auditing
responsibility given under clause (1) of Article 128, as such the law may prescribe.
As part of the responsibility of Comptrollership and the authority provided under the
Additional Functions Act 1974 and amendment Act 1975, the CAG is empowered to
authorize payments from the treasury and incorporate all valid transactions into the Accounts
of the Republic (Government Accounts) after conducting pre auditing functions. The Civil,
Defense and Railway Accounts Departments under the CAG consolidate the Accounts of the
Republic, after these are reconciled with the executives who maintain their own accounts
following the General Financial Rules (GFR).
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The Accounts of the Republic consists of the Appropriation Accounts and the
Financial Accounts. Appropriation Accounts show the expenditure status of a particular
Ministry/Division vis a vis budgetary grants. Historically four Appropriation Accounts such
as Appropriation Accounts (Civil), Appropriation Accounts (Defense), Appropriation
Accounts (PT&T) and Appropriation Accounts (Bangladesh Railway) are compiled by the
three accounting circles under the CAG, i.e. Controller General of Accounts (CGA),
Controller General Defense Finance (CGDF), Chief Accounts Officer (T&T) and Additional
Director General (Railway Finance), respectively.
The Finance Accounts is the balance sheet of the Government, maintained under the
cash basis system of accounts and incorporates cash and other balances of the Government.
The Finance Accounts is compiled by CGA through consolidating the balances of the three
accounting circles under OCAG.

Government Accounting Standards
On the other hand, Article 131 of the Constitution empowers CAG to prescribe forms
and manners of government accounts or to formulate government accounting standards. The
Account Code issued by the Comptroller and Auditor General describes the forms and the
manner in which the Republics Accounts are maintained compiled and disclosed.
The concept of Consolidated Fund, Treasury Single Account and the limit of financial
authority provided by the Parliament through Annual Budget are the features of present Cash
Basis government accounting system. This time-tested and comprehensive Cash Basis
Accounting System has been efficiently and effectively used by the public sector.
It should be noted that the financial statements prepared using Cash Basis Accounting
principles provide readers with information about the sources of cash raised during the
period, the purpose for which cash was used and the cash balance at the reporting date. This
is standardized by the International Public Sector Accounting Standards Board (IPSASB)
through a comprehensive Cash Basis IPSAS. The standard also acknowledges the right of
governments and National Standard Setters to establish accounting standards and guidelines
for financial reporting within their Jurisdictions and suggests that IPSASs may assist such
standard- setters in developing new standards or revision of existing standards in order to
contribute to greater comparability.
At present the Cash Basis Treasury Single Account (TSA) system is practiced in
Bangladesh. Under TSA government funds are managed by a central entity and individual
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departments and entities do not control the cash they have been appropriated or otherwise
authorized to spend. This system serves the versatile needs of public sector entities in
Bangladesh and complies with requirements of the Cash Basis IPSAS by ensuring proper
presentation of general purpose financial statements/government accounts, transparent
financial reporting and enhanced comparability of financial statements /government accounts
etc.
In the last three decades different reform initiatives have been introduced in the public
sector accounting practices. Accounts have been decentralized up to upazilla levels, 13 digit
economic codes have been introduced in place of the old alpha numeric codes, accounts
compilation process in the CGA has been computerized and keeping in line with these
changes the Account Code has been updated. At present reform initiatives are going on in
railway accounting practices.

Accounts of the Republic
Ensuring Accountability & Transparency It should be noted that the main purpose of
public sector accounting is to serve the requirements of the Parliament. The authority to
spend money is granted by Parliament through passing of Appropriation Bill. When budget is
approved and passed by Parliament responsibility for the control and use of public monies
lies with the Principal Accounting Officer (PAO) or Secretary to the Ministry or Division.
The Principal Accounting Officer is responsible for the safeguarding of public funds
following the standards of financial propriety and for maintaining regularity of expenditure
from the public funds. He is accountable not only for the expenditure against the budget but
also for the propriety of each individual transaction.
Accounting records and financial information help keep the Government abreast of
the trend of receipts and expenditure vis a vis budget estimates. Therefore, as part of the
public sector accountability regime the CAG submits audited Annual Appropriation Accounts
and Finance Accounts to the Parliament, with specific opinion on the reliability, accuracy,
completeness and timeliness of the accounts. The Audit opinion is designed to assist the
Parliament and especially the Public Accounts Committee to examine to what extent the
PAOs have been able to achieve the targets set by the Parliament through the Annual Budget.




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Role of Accounting Profession - ICAB
The professional Accountancy organization of a country, when properly structured
and supported can have a powerful impact and bring greater reform and development for the
benefit of the public interest by acting as a centre of professional excellence (resource) for the
Government, regulators, and the private sector to develop the overall economy of a country.
As a member of IFAC, ICAB is committed to serving the public interest. ICAB holds the
accountability to be responsive to researches and practices on the standards developed by the
IPSAS Board. ICAB should play a role to incorporate the requirements of IPSASs in to the
national public sector accounting systems for financial reporting by the Governments. ICAB
should use its best endeavors in playing the role of communicator in compliance with IPSAS
by the supreme accounting and auditing authority of Bangladesh. ICAB could assist with the
implementation of IPSAS or public sector accounting standards that incorporate IPSAS. The
ICAB has a positive role in educating and training its members, developing awareness and
for proactively positioning itself as a self-regulatory profession to drive mandatory and
voluntary
CG practices through implementation of Best Code of CG Practices and related
provisions for enabling the desired levels of accountability and transparency in the corporate
information and discussion. The ICAB should contribute to CG practices through ensuring
quality financial reporting and audit practices. As the custodian of accounting and
auditing standards, the ICAB is constantly engaged in the adoption of International
Accounting Standard (IAS) promulgated by the International Accounting Standard Board as
Bangladesh Accounting Standards (BAS) and the International Standards on Auditing (BSA).
The ICAB Council, through its Technical and Research Committee exercises stringent vetting
procedures in the adoption process, to overcome any inconsistencies and ensure conformity
with local laws and regulations. The ICAB had completed a project titled Development of
Accounting and Auditing Standards in Bangladesh in 2003, financed by the World Banks
Institutional Development Fund. Under the project a series of reports have been prepared,
including a Report on Corporate Governance, one on Professional Ethics, and survey Report
on Non-Financial Companies. The project has also supported the development of extensive
course materials on a good number of IAS and ISA. Workshops were organized to train 600
participants on these Standards, including ICAB members and SEC officials.


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Findings
In this term paper, we are findings many things to effect government accounting in
Bangladesh. They are no properly recorded transaction. They have no properly guide
accountability one to another in their accounting system. There are many corruptions,
wastage of national resources in Bangladesh. They are not properly following GAAP in their
accounting system. So, Bangladesh is not properly Government Accounting Practices.



Conclusion
Public Sector accounting functions are the pillars for the accountability and
transparency of the Government to ensure good governance. The Office of the Comptroller &
Auditor General of Bangladesh plays a vital role in ensuring efficient and effective
accounting and auditing functions in the public sector.
The major function of accounting information is viewed as that of aiding the process of
organizational control. The accounting records are the most reliable and dependable source of
information for the top management in their decision making process. Financial information
of the Government is used not only by the public sector entities, but also by different national
and international organizations and agencies for various purposes. Therefore, it is essential
that accounting and financial information of the government represents accurate and reliable
position of the Ministries and Departments regarding all sorts of transactions in a timely
manner. Through the accounts compilation functions and audit activities, OCAG can enhance
the reliability of the government financial management system and cater to the need for
reliable and dependable information of the stakeholders.





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References
1) Ramadhan, 2009. Budgetary accounting and reporting practices in Bahraini governmental
units: An empirical study. Sayel Ramadhan. International Business Review 18 (2009)
168183.

2) Cheng. 1992. An Empirical Analysis of Theories on Factors Influencing State
Government Accounting Disclosure. Rita Hartung Cheng. Journal of Accounting and
Public Policy, I I, I-42 (I 992).

3) Zeghal et al, 2006. An analysis of the factors affecting the adoption of international
accounting standards by developing countries. Daniel Zeghal & Karim Mhedhbi. The
International Journal of Accounting 41 (2006) 373386.

4) www.icab.org.bd

5) en.wikipedia.org