Financial Accountability and Disclosure in the Public Sector

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Memo Financial Accountability and Disclosure in the Public Sector The Background of Contemporary Public Sector Financial Accountability Traditional for-profit business organizations have always provided formal financial accountability information, mainly because stakeholders such as investors, stockholders, and partners require and expect them. Until relatively recently, non-profit organizations and public-sector entities have not been subject to the same scrutiny. However, with every public disclosure of financial irresponsibility, waste, and misappropriation of funds, those entities and institutions have been under increased pressure by the public to provide the same types of disclosure and financial documentation as has traditionally been the case with private-sector, for-profit organizations. The Meaning of Financial Accountability and Disclosure in the Public Sector In government, there is always tremendous potential for financial waste because there are no stakeholders who are directly affected by financial losses. Bad financial decisions and overpayment simply increase the expenses and the annual budget of the organization and those costs are passed along to the tax-paying general public. In recent years, public disclosure of the extent to which financial waste costs all taxpayers money has led to increasing demand for financial oversight to ensure that public funds are not wasted at the expense of the general public. In non-profit organizations, there is a
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