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091275 1 (1976-05-06)

handle is hein.gao/gaobadxhu0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. 20548 For Release on Delivery Expected at 11:00 A.M. EDT Thursday, May 6, 1976 PY1 = 0F 11111111111111111111111U llll11 ELMER B. STAATS LM091275 COMPTROLLER GENERAL OF THE UNITED STATES TO TIE COMMITTEE TO INVESTIGATE A BALANCED FEDERAL BUDGET OF TE DEMOCRATIC RESEARCH ORGANIZATION oN IMPLEMENTING ACCRUAL ACCOUNTING WITHIN THE FEDERAL GOVERNMENT Mr. Chairman and Members of the Committee: When the Budget and Accounting Procedures Act of 1950 was passed, the General Accounting Office made it a requirement that agency accounting systems be maintained on an accrual basis in order to secure Comptroller General approval. Accrual accounting was recommended in 1949 by the First Hoover Commission. In 1956, based on the Second Hoover Commission Report, the Congress amended the 1950 Act and specifi- cally directed that agencies maintain their accounts on an accrual basis. Before proceeding, a brief analogy between cash and accrual accounting is probably in order. Most people are familiar with cash accounting because it is the basis they use for their household accounts-- that is, income is recognized when cash is recorded in the checkbook and expenses are recognized when the bills axe paid. Accrual account- ing on the other hand recognizes income when it is earned, regardless of when actually received, and recognizes expenses when they are incurred regardless of when the bills are paid. For example, if a merchant buys goods for $1,000, sells them for $1,200 and makes a financial statement before he pays for the goods, he will show a $1,200 profit on the cash /-<2_.c, 6?

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