(1) The governmental environment differs markedly from that of business enterprises. Governmental accounting systems and reports and the information they provide will differ accordingly. Thus, a set of generally accepted accounting principles (GAAP) applicable to governmental accounting and reporting has been developed for use by governmental units. These accounting principles are designed to enhance fiscal control, facilitate compliance with GAAP and finance-related legal and contractual requirements and result in financial statements and reports that fulfill many user information needs. GAAP provide uniform minimum standards of and guidelines for financial accounting and reporting. GAAP encompass the conventions, rules and procedures necessary to define accepted accounting practices at a particular time. They include not only broad guidelines of general application, but also detailed practices and procedures.
(2) The primary authoritative source on the application of GAAP to school districts is the Governmental Accounting Standards Board (GASB) . The basic accounting principles are explained in detail in the "Codification of Governmental Accounting and Financial Reporting Standards" published by GASB.
(3) To assure school districts comply with GAAP and to clarify application of GAAP when necessary, the Superintendent of Public Instruction establishes uniform accounting and reporting policies for all school districts. This will be accomplished through the issuance of the "School Accounting Manual" and subsequent updates. In the absence of policy from the Superintendent of Public Instruction, the hierarchy of GAAP set forth in GASB Statement 1 should be followed. This hierarchy is as follows:
(a) Pronouncements of the Governmental Accounting Standards Board (GASB) ;
(b) Pronouncements of the Financial Accounting Standards Board (FASB) ;
(c) Pronouncements of bodies composed of expert accountants that follow a due process procedure, including broad distribution of proposed accounting principles for public comment, for the intended purpose of establishing accounting principles or describing existing practices that are generally accepted;
(d) Practices or pronouncements that are widely recognized as being generally accepted because they represent prevalent practice in a particular industry or the knowledgeable application to specific circumstances of pronouncements that are generally accepted; and
(e) Other accounting literature.
History: 20-9-102, 20-9-201, MCA; IMP, 20-9-201, MCA; NEW, 1990 MAR p. 717, Eff. 4/13/90; AMD, 2000 MAR p. 632, Eff. 2/25/00.