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The following explanations of terms are presented to aid in understanding the narrative
discussions and illustrations included in this text and the terminology generally used in
governmental accounting, auditing, financial reporting and budgeting. Because this
glossary is reprinted from the Government Finance Associations Governmental
Accounting and Financial Reporting, the terms and explanations have not been modified to
reflect specific Texas school district issues, etc. Synonyms for specific terms also may be
presented in this appendix. In such instances, the abbreviation "syn." is used before the
term.
ACCOUNTABILITY. Being obliged to explain ones actions, to justify what one does.
Accountability requires governments to answer to the citizenry-to justify the raising of
public resources and the purposes for which they are used. Governmental accountability is
based on the belief that the citizenry has a "right to know," a right to receive openly
declared facts that may lead to public debate by the citizens and their elected
representatives. [SGAC1]
ACCOUNTING PRINCIPLES BOARD (APB). Authoritative private-sector
standard-setting body that preceded the FASB. The APB issued guidance in the form of
Opinions.
ACCOUNTING STANDARDS EXECUTIVE COMMITTEE (AcSEC). An AICPA
committee that is authorized to issue Practice Bulletins. A Practice Bulletin specifically
targeted to state and local governments and cleared by the GASB would enjoy "level 2"
status on the hierarchy of authoritative sources of GAAP established by SAS No. 69, The
Meaning of "Present Fairly in Conformity with Generally Accepted Accounting
Principles" in the Independent Auditors Report.
ACCRUAL BASIS OF ACCOUNTING. A method of accounting that recognizes the
financial effect of transactions, events, and interfund activities when they occur, regardless
of the timing of related cash flows.
ACQUISITION COSTS. Term used in connection with public-entity risk pools. Costs that
vary with and are primarily related to the acquisition of new and renewal contracts.
Commissions and other costs (e.g., salaries of certain employees involved in the
underwriting and policy issue functions, and inspection fees) that are primarily related to
contracts issued or renewed during the period in which the costs are incurred are
considered to be acquisition costs [SGAS 10]
ACTIVITY. A specific and distinguishable service performed by one or more
organizational components of a government to accomplish a function for which the
government is responsible (e.g., police is an activity within the public safety function).
ACTUARIAL ACCRUED LIABILITY. Term used in connection with defined benefit
pension plans. That portion, as determined by a particular actuarial cost method, of the
actuarial present value of pension plan benefits and expenses which is not provided for by
