What is Public Accounting? Definition of Public Accounting, Public Accounting Meaning and Concept
Public accounting is the part or branch of accounting dedicated to the registration, rendering and supervision of economic and financial operations carried out in public administration.
Since the State is an entity that creates structures, entities and departments destined to provide common welfare to the entire society. This public heritage generated, which includes public or State companies and the different administrations, requires that we all know about its management, use and condition.
It should be noted that there is a marked difference between national accounting and public accounting. National accounting quantifies macroeconomic magnitudes, such as national income, national product, national consumption, etc. Meanwhile, public accounting quantifies microeconomic variables that have to do with the budget of different public sector entities.
Public accounting comes, then, to be in charge of carrying out all the processes related to notifying, quantifying and verifying the records of economic activities carried out by the public sector.
In this way, at all times it is possible for the interested parties to know about the activities, obligations, rights and debts of the public administration. It should be noted that this accounting must reflect transparency, in all its scope. The instrument or central axis of public accounting becomes the General State Budget. Knowing that this contains the amounts of income and expenses and their subsequent implementation.
Objectives of public accounting
Public accounting meets a series of fundamental objectives, they are the following:
- Make known to all members of society the financial situation of the Government.
- Produce all necessary information for public management administrators, aimed at making decisions.
- Systematically record every economic and financial transaction in the public sector.
- Produce and supply all the information required for the formation of national accounts.
- Generate the due financial statements that present the equity, income, expenses, assets and liabilities of all of the different administrations and entities of the public sector.
- Reserve all accounting supports that allow any type of audit by other bodies, whether internal or external.
Thus, for example, the General State Budgets are part of the public accounting, while the GDP is part of the national accounting.