Despite the critical role state, local, and federal governments play in managing trillions of taxpayer dollars, most accounting students graduate without ever learning how public finances are actually reported.

While private companies follow accounting rules set by the Financial Accounting Standards Board (FASB), governments operate under entirely different frameworks—GASB (Governmental Accounting Standards Board) for state and local governments, and FASAB (Federal Accounting Standards Advisory Board) for federal agencies. These rules govern everything from pension reporting to how a “balanced budget” is defined. And yet, in most college and university accounting programs, they’re barely mentioned.

This education gap has real consequences:

• Future CPAs are trained to audit corporations, not governments. Unless they take a rare elective in governmental or nonprofit accounting, most students leave school unfamiliar with fund accounting, deferred outflows and inflows, or the reporting of unfunded pension liabilities.
• Government misreporting often goes unchallenged. Deceptive practices—such as using cash-basis budgeting or classifying borrowed funds as revenue—often slip through the cracks, unexamined by professionals who were never taught to question them.
• Taxpayers are left in the dark. Without professionals and watchdogs fluent in government accounting, financial transparency and accountability suffer, paving the way for ballooning debt, off-the-books obligations, and taxpayer-funded bailouts when crises hit.
   

Even the CPA exam, the gold standard for accounting licensure, only includes a small portion (around 5–15%) of government and nonprofit accounting in one of its four sections, the FAR. That’s not nearly enough to cover the complexities and long-term risks embedded in government financial reports.

This knowledge gap also fuels a dangerous myth: that state and local governments operate with sound, balanced budgets. In reality, many balance their books through accounting gimmicks, borrowing, or by deferring critical payments, like pension contributions, to future generations.

If we want public officials to manage finances responsibly—and for citizens and professionals to hold them accountable—we must prioritize government accounting education at both undergraduate and graduate levels. It’s not a partisan issue; it’s a public integrity issue.

Sheila Weinberg, Founder and CEO of Truth in Accounting says, “If the government can’t count honestly, then we can’t count on the government.”

It’s time to close the education gap—and demand transparency from the ground up, OR simply have governments at all levels follow the same Generally Accepted Accounting Principles (GAAP) as corporations.

Truth in Accounting is an organization raising awareness of this gap. Their work is essential—and why education reform is a crucial part of the long game. If Americans want financial transparency in government, we need to teach future accountants, journalists, and citizens how the system actually works. Click here for more information, read the latest reports, and/or join their free email list to receive accurate and transparent government numbers straight to your inbox weekly.