GOVERNMENT'S NEW NORMAL: A Changing Role for Auditors

State and local governments face extreme fiscal challenges as revenue sources shrink and new, long-standing obligations expand. This combined with revised requirements for pension and benefit recognition and reporting creates unique pressures on governmental financial conditions. Given this environm...

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Bibliographic Details
Published in:The journal of government financial management 2013-10, Vol.62 (3), p.12
Main Authors: Marsh, Treba, Fischer, Mary, Montondon, Lucille
Format: Article
Language:English
Subjects:
Auditors
Audits
Bankruptcy
Budget deficits
Credit ratings
Employees
Enterprise resource planning
Financial statements
Fiscal years
Foreclosure
Furloughs
Government
Government agencies
Information technology
Layoffs
Local elections
Pensions
Politics
Property taxes
Rating services
Risk management
State budgets
Tax revenues
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Summary:State and local governments face extreme fiscal challenges as revenue sources shrink and new, long-standing obligations expand. This combined with revised requirements for pension and benefit recognition and reporting creates unique pressures on governmental financial conditions. Given this environment, auditor diligence must prevail to provide adequate assurance to stakeholders. The economic downturn that began in 2007 drastically decreased tax revenues for governmental entities. Planning and conducting an audit of governmental financial statements requires an understanding of the governmental entity and its economic environment plus -- increased professional skepticism. Governmental entities cannot continue to provide services costing more than the revenues received. Plus, if revenue expectations are unrealistic, the auditors must examine liquidity issues. Decision-makers must recognize risks faced by governmental entities are many and complex, and can come from both external and internal sources. The auditor must recognize many identified risks have financial statement implications, and controls must be in place to mitigate those risks.
ISSN:1533-1385