Chapter 3, Problem 1Q

Governmental budgeting and budgetary control are deemed so important by the GASB that it devotes an entire principle to the subject. Why?

To determine

Explain the reason why the governmental budgeting and budgetary control are deemed so important by the Governmental Accounting Standards Board (GASB).

Explanation of Solution

Explain the reason why the governmental budgeting and budgetary control are deemed so important by the Governmental Accounting Standards Board (GASB) as follows:

Naturally, a government must attempt to provide as many goods and services when it faces the unlimited demand rather than stable or fixed revenue. Hence, the government should set priorities and plan carefully in order to allocate their scarce resources and control their application of scarce resource. Government should evaluate the result of their operations from both of legality and efficiency and effectiveness. The budgetary process is a principle by which the governmental activities are planned, controlled and evaluated.