As always, readers can count on this edition to include authoritative changes from the Financial Accounting Standards Board, Governmental Accounting Standards Board, Federal Accounting Standards Advisory Board, American Institute of Certified Public Accountants, Office of Management and Budget, Internal Revenue Services, and Government Accountability Office. Update bulletins will be provided periodically on the text Web site as new authoritative statements are issued.

Several significant changes have been made in this edition of the text. The sample financial statements have been moved to an appendix in Chapter 1 and the management’s discussion and analysis (MD&A) has been moved to an appendix in Chapter 9 for easier reference. A new appendix on managing investments has been added to Chapter 8. In a slight reorganization of coverage, what was formerly Chapter 11, “Auditing of Governmental and Not-for-Profit Organizations,” is now Chapter 12. This chapter also has been modified to increase its focus on generally accepted governmental auditing standards. In Chapter 13, more emphasis has been placed on performance given the unique nature of governments. In addition, an appendix on cost and budget issues in grant accounting has been added to Chapter 13. Illustrative financial statements for the American Heart Association and related discussion have been incorporated into Chapter 14.

In addition to these changes, all chapters have been updated to reflect changes in the areas of accounting and auditing affecting governments and not-for-profit entities. Based on comments received and the collective experience of the authors, some items in this edition have received increased attention (e.g., major funds and postemployment benefits). A most significant enhancement is that this edition now features a second computerized practice set, the City of Bingham, which is equally as comprehensive and effective as the widely used City of Smithville practice set. Both practice sets are now downloadable from the publisher’s Web site (for more information, see inside the front cover of this text).