Looked at our annual town report for Charlestown, NH but never
with the lens I did today. c 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. c 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
