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Who Makes the City and County Accounting Rules We Must Follow?

This Advisor column was originally published in August 2005.

Washington is a bit unique in this regard. We thought for our first finance article that it may be of interest where all these rules we use come from.

On a national level, the accounting and financial reporting rules come from the Governmental Accounting Standards Board (GASB). They operate very much like their private sector counterpart (Financial Accounting Standards Board) in making the various rules we follow. The rules they create are known as "Generally Accepted Accounting Principles" or GAAP. You can learn more about the GASB at their website. Also on the national level, the Government Finance Officers Association (GFOA) has developed a set of best practices. You can find out more about GFOA at their website.

Here in Washington however, we have our own set of rules. RCW 43.09.200 says the Washington State Auditor shall prescribe a uniform system of accounting and reporting for all local governments. This is not totally unique in the country as a few other states have a statewide office establishing the accounting rules. What is completely unique is that the State Auditor then conducts the audits of all these local governments.

Back to accounting rules - another very unique thing in Washington is that we don't require the same rules of all cities or counties. The rules for cities above 25,000 population and counties above 50,000 population closely follow GAAP. (Note: there are a few other criteria) However, cities and counties smaller than these levels follow a cash basis accounting system developed by the Auditor's Office. Across the country, it doesn't matter what size of local government you are. The rules for small cities and small counties are the same complicated rules that the larger ones follow here in Washington.

The State Auditor has created a "Local Government Advisory Committee" to get input into the rules that they have developed. The rules are contained in the BARS manual (that is Budgeting Accounting and Reporting System). These are available on-line at the State Auditor's website.

The benefit of a uniform accounting system is an excellent data base of all this information. So if you ever want to know how much money another city gets or how much they spend on a certain function, just go to the Local Government Financial Reporting System website. It is very easy to use and a great resource.

So you have something to be thankful for! These are: more reasonable rules for smaller cities and counties, and an excellent tool for comparisons.

If you have suggestions for future articles, let us know.

MRSC is a private nonprofit organization serving local governments in Washington State. Eligible government agencies in Washington State may use our free, one-on-one Ask MRSC service to get answers to legal, policy, or financial questions.

Photo of Mike Bailey

About Mike Bailey

Mike served as a Finance Consultant for MRSC for several years before retiring in 2020.

Mike writes about local government financial management, local government budgeting, financial leadership, and strategic planning processes.