Looked at our annual town report for Charlestown, NH but never
with the lens I did today. Looking at the financials and the many
reports used to present the data to the residents of the town, I could
see many differences. The town reports listed salaries by
departments and many by individual job positions (no names were
used). It also reported all income and expenses relative to the
related budgeted amounts. Every department and sub-department
had sections of their own. This is very different from regular
financials you look at. I believe it is relative to the focus of the
financials. A business is a for profit entity selling a good or service to
the public and have stakeholders. A government (in this case my
town) is not a for profit entity, it isn't in the business of selling goods
or services, and it has a very wide and diverse group of stakeholders.
The financials for the government needs to inform the taxpayers
where exactly their taxes, registrations and any other fees they pay
have gone. The town needs to answer to the people as to whether
they have followed the budgets that were voted on. This is very
different from what stakeholders looking at a business's financials
wants to see. They want to see the revenue that was generated
from their specific investment and the investment of others. They
want to know how well the company has generated profits and what
kind of net operating margins they had, if they could pay dividends, if
they increased or decreased leverage, how well they managed to
generate contribution margins to provide for overhead and growth,
and basically the general financial health of the company. Because
the focus of the two different entities is different, it explains the
difference in their reporting. Each is providing its stakeholders with
what they want and need to know, and in the case of the local
government, have a legal right to know.
Christensen, T., Cottrell, D., & Budd, C. (2019). Advanced Financial
Accounting, Twelfth Edition. Retrieved from https://prod.reader-
ui.prod.mheducation.com/epub/sn_33530/data-
uuid-
fa2d6d0c43f04ae9b79f83570e0bd6db
