How the Federal Government Tracks Its Money
The U.S. Federal Government divides power between three branches. When it comes to money, Congress decides how much to spend and on what, while the executive branch runs the government and reports on spending. Regular accounting doesn't track budgets, so the government needs a special system called "budgetary accounting." This system has developed over time to improve management and transparency.
What the Constitution Says
Article I, Section 9, Clause 7: No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.
The Constitution gives Congress the power to decide on spending, while the executive branch must report on it. This means the executive branch needs to track both what is spent and what Congress has allowed it to spend.
Why We Need Two Types of Accounting
Regular (proprietary) accounting tracks things like assets, debts, expenses, income, and overall financial position. But it doesn't track what Congress has approved for spending. That's where budgetary accounting comes in.
Budgetary accounting specifically tracks the budget using the "4000 series" accounts. These accounts help create the "Status of Budgetary Resources" financial statement. This statement shows what money is available and how it's being used.
Why This Matters
Knowing how to use budgetary accounting helps federal financial professionals:
- Create accurate financial reports
- Keep track of their budget status
- Follow the spending limits set by Congress
Anyone working in federal finance needs to understand budgetary accounting to be a responsible manager of taxpayer money
