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BUDGETARY AND PROPRIETARY ACCOUNTS OF THE FEDERAL GOVERNMENT.

E. E. Naylor
The Accounting Review 1940 15(4), 485-494
Abstract The accounting system of the national government is similar in many respects to the systems maintained by various state and municipal governments. One of the primary functions of accounting is to present clearly and promptly all the facts that are essential and necessary to good judgment and efficient administrative action. Municipal accounting is comparable in many ways to commercial accounting, yet the terminology is frequently different, and it is for this reason that municipal and governmental accounting seems rather difficult to the accountant who has not specialized in one of these technical fields. It can be said that Federal accounting presents no more difficulties than commercial accounting. According to the author, the budgetary accounts are separate and distinct from the accounts known as proprietary accounts. Budgetary accounts being in the nature of controlling accounts, whereas proprietary accounts disclose detailed information relative to assets, liabilities, revenues, and expenditures.

Reporting Bias

Paul E. Fischer; Robert E. Verrecchia
The Accounting Review 2000 75(2), 229-245
We present a simple model of managerial reporting bias for a setting in which the capital market is uncertain about the manager's reporting objective. In this setting, the manager's reporting bias reduces the value relevance of the manager's report; that is, it adds noise to the report. Through comparative static results, our model yields insights into factors that affect the slope and intercept terms in a regression of price on earnings. Specifically, we find that the information content of the manager's report, as captured by the earnings slope coefficient, falls as the private cost to the manager of biasing reports falls, and as the uncertainty about the manager's objective increases. We also find that the magnitude of the adjustment for the expected amount of bias, as captured by the absolute value of the intercept, falls as the uncertainty about the manager's objective increases. Finally, to highlight conditions under which managers would lobby to retain an option to bias reports (i.e., retain reporting flexibility), we analyze the effect of the option to bias on the manager's welfare. For example, we show that the ex ante benefit from biasing the report is positive if there is sufficient uncertainty about the manager's reporting objective.