Following a review of generally accepted accounting principles applicable to governmental units, some basic distinctions between accounting for governmental entities and accounting for commercial enterprises are detailed. The historical concepts of budgeting, along with current budgeting practices and procedures, are described. The section on concepts of auditing that are unique to governmental units covers fraud detection, financial compliance with legal requirements, and auditing for program compliance, efficiency, economy, and performance. General and specific procedures are outlined that may be appropriate to governmental bodies, depending on legal considerations, internal accounting controls, and materiality. Areas considered include revenues, expenditures, assets, liabilities, fund balances, special revenue funds, capital project funds, and special assessments. Financial reports now published by governments for citizens and investors frequently contain financial statements. Suggestions are provided to guide auditors in an examination of such statements to ascertain that they present a financial position and results of operations in a manner that is fair and conforms with generally accepted accounting principles. While the government unit is responsible for a financial statement, the independent auditor is responsible for the report on the examination. Routine items that should appear in this report are detailed, along with special problems that the auditor may encounter, such as inadequate disclosure or revenue auditing difficulties. The appendixes contain examples of financial statements and supplemental schedules, sample auditors' reports, and an analysis of professional pronouncements applicable to financial statements of governmental units.