Acc/280 Wk Three Letter to Senator

c/o University of Phoenix

13221 SW 68th Parkway, Suite 500

Tigard, Oregon – 97223

Senator Ron Wyden

223 Dirksen Senate Office Building

Washington, DC 20510-3703

July 7, 2010

Senator Wyden,

Recently, an opportunity presented itself to review graduate work on the differences between accrual versus cash-based accounting method and the effects of each on financial reporting in the business and government sectors. The experience proved to be very enlightening and served as the catalyst for this request for change in within the current United States Government accounting practices. Complete references to the source of all information contained in this letter are noted at the conclusion of our remarks. It is our hope that you would avail yourself of the opportunity to read each of the works fully as a means of better understating our position. It is our further hope that after reviewing both articles that you would serve as the advocate for change that we seek.

One article, by Danny Klinefelter and Dean McCorkle out of Texas A&M University, provided an excellent explanation the differences between the two practices. According to the authors, the primary difference between the two boils down to when revenue and expenses are “recognized and recorded “(p.1 of the work by Klinefelter and McCorkle). If you chose to read the work for yourself, you may find it interesting that the authors advocate the accrual method as a more “accurate” and “realistic for measuring business performance” (Klinefelter & McCorkle, 2001, p.1). I find the statement very pertinent because in reality, what if anything is government but one of the largest businesses imaginable.

Another work out of Harvard Law School, a Federal Budget Policy Seminar Briefing by Mark Champoux, speaks of the experiences in New Zealand and Australia as both countries implemented accrual accounting-based systems. One point of particular interest and concern was found on page three, where...