What is meant by 'accountability' in governmental accounting?

In governmental accounting, 'accountability' refers to the obligation of government entities to justify their financial decisions to the public. This concept is fundamental because governments operate using public resources, and as such, they are answerable to the citizens they serve. Accountability fosters transparency and builds trust, ensuring that governmental bodies are held responsible for how they allocate and spend public funds.

The focus on accountability reflects the necessity for transparency in governmental decision-making processes. Citizens expect to know how their tax dollars are being used and to what purpose, which is why governments must track their financial operations and report them accurately. This is in stark contrast to profit-oriented entities, which prioritize financial returns for shareholders, highlighting how public sector accountability is more about service and stewardship than about profit maximization.

Understanding this obligation helps clarify the broader goals of governmental accounting, which prioritize ensuring that resources are used effectively and efficiently in serving the public interest.