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Finance and Accounting
Finance & Accounting
Pages 3 (753 words)
The different environments of accounting in government and the private sector cause the differences in the reporting between the government and the private sector. The core objective of government agencies is not the profit motive but the need to provide public goods and services…
Managers of public sectors and their agencies are the politicians. Politicians are elected by the citizens to act on their capacity and serve their interests when in office. After being granted this mandate, the citizens bequeath their duty of keeping the politicians accountable. Worse still, the leadership portrayed by the politicians is always authoritative, as they do not give the opportunity for the public to look and assess the performance of public entities. This thus makes it impossible to uncover, dwindling financial positions in the public as opposed to the private companies where the shareholders have access to the financial statements and can put the management to account for how the resources have been used. Failure to do so, grants the shareholders an opportunity to dismiss the directors and appoint new ones who can manage successfully the businesses. This has shielded the government from having their bankruptcy being uncovered. Finally, the creditors of public organizations assure that there is no risk in lending to the government. This makes them reluctant to panic and have worries on whether their money will be repaid. The government debt is considered risk free since the government can do anything to ensure that the obligations are repaid. Lenders to private firms are always interested in the ...
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