According to GASB Concepts Statement No. 1, relevance is the primary quality that makes information useful for decision-making. Information is relevant if it is capable of making a difference in a user’s decision. While reliability, understandability, and timeliness are also crucial, relevance is the cornerstone upon which the other characteristics build.

The proper first step is internal analysis. Apportionments (from OMB) and allotments (internal agency controls) legally limit the rate of obligation or expenditure. Reviewing these documents will show if the agency established proper controls and stayed within them. Jumping to conclusions about a violation or an external investigation is premature without this foundational analysis.

A preventive control, like locked, tamper-evident bags requiring dual custody (two keys), physically secures the cash from the point of collection until it is counted and recorded. Reconciliation (A) is a detective control, surprise audits (C) are a detective/deterrent control, and bonding (D) is a mitigating control after a loss occurs. The most effective control prevents the loss from happening in the first place.

The Statement of Budgetary Resources (SBR) is a key component of federal financial reporting. Its primary purpose is to report on the status and flow of budgetary resources—how much was made available by Congress (appropriations), how much was obligated, how much was spent (outlays), and what remains unused. It directly links financial activity to congressional authority.

The core issue is a conflict of interest, which impairs objectivity. Even if the price is fair, the personal relationship creates a situation where the manager’s judgment could appear—or actually be—biased. This undermines the principles of fair and open competition and the proper stewardship of public funds. While it may also violate specific procurement rules (C), the fundamental ethical and control failure is the conflict of interest.

A key distinction between modified accrual and full accrual accounting is the treatment of long-term capital assets. Modified accrual focuses on current financial resources and typically expenses capital outlays. Full accrual accounting requires capitalizing these assets and allocating their cost over their useful lives through depreciation expense, which provides a more complete picture of the cost of providing services.

A core principle of the Government Performance and Results Act (GPRA) and modern federal reporting is the integration of financial and performance information. The performance report explains the mission, goals, and results achieved. The financial statements show the cost of those activities. Together, they tell a complete story of how efficiently and effectively taxpayer dollars were used to achieve outcomes.

This practice violates the bona fide needs rule, which states that appropriations are available only to fulfill a legitimate (bona fide) need of the fiscal year for which the appropriation was made. Obligating funds at year-end for a next-year need is an attempt to circumvent this rule and is considered an improper use of funds, often referred to as ‘parking’ money.

Unrestricted Net Position represents resources that are not restricted or committed for specific purposes. A large deficit (negative balance) indicates that, on a full accrual basis, the government’s liabilities and deferred inflows exceed its unrestricted assets. This is a strong indicator of long-term fiscal stress, suggesting that current revenue streams are not adequate to sustain the current level of public services and obligations into the future.

According to GASB Concepts Statement No. 1, relevance is the primary quality that makes information useful for decision-making. Information is relevant if it is capable of making a difference in a user’s decision. While reliability, understandability, and timeliness are also crucial, relevance is the cornerstone upon which the other characteristics build.0