Then and Now: 65 Years of the Blue Book.

• Author: Gauthier, Stephen J.

By examining the history of GFOA's Blue Book on accounting, auditing, and financial reporting, this article provides an overview of the background behind governmental accounting organizations, guidelines, and principles.

This year the Government Finance Officers Association (GFOA), originally known as the Municipal Finance Officers Association (MFOA), marks its 95th anniversary. One of the hallmarks of GFOA for 65 of those years has been its well-known "Blue Book" on governmental accounting, auditing, and financial reporting. The recent release of the latest version of Governmental Accounting, Auditing, and Financial Reporting, offers an excellent opportunity to review the history of the Blue Book and the unique role it has played in accounting and financial reporting for state and local governments.

The Birth of the Blue Book

Accounting and financial reporting provide the informational infrastructure needed to support the public finance function. Consequently, sound accounting, auditing, and financial reporting are vital to the credibility and effectiveness of government finance officers. Given this fact, it is not surprising that one of MFOA's original objectives was to improve the quality of accounting and financial reporting for municipal governments. Indeed, MFOA assumed leadership of the movement for improved public-sector accounting and financial reporting by establishing the National Committee on Municipal Accounting (NCMA) in 1934.

NCMA comprised representatives of various professional organizations with a direct interest in the quality of publicsector accounting and financial reporting. Two years after it was founded, the committee published NCMA Bulletin No. 6, Municipal Accounting Statements, which today is commonly viewed as the prototype for the Blue Book. This 1936 publication marked a crucial first step toward identifying and promulgating the principles and standards that eventually would constitute generally accepted accounting principles (GAAP) for state and local governments.

After World War II, NCMA was replaced by the National Committee on Governmental Accounting (not to be confused with the National Council on Governmental Accounting, which is discussed later). The new committee began its work by combining a revised version of Municipal Accounting Statements with three other authoritative publications (Municipal Funds and Their Balance Sheets, Municipal Accounting Terminology, and Municipal Audit Procedure). The result was Bulletin No. 14, Municipal Accounting and Auditing, commonly referred to as the 1951 Blue Book. This new, expanded publication was characterized by the following four-part structure:

* municipal accounting principles and procedures;

* discussion of individual funds and illustration of financial statements;

* municipal audit procedure; and

* municipal accounting procedure.

Two years after the publication of the 1951 Blue Book, the National Committee on Governmental Accounting issued a companion publication, A Standard Classification of Municipal Accounts (1953).

From Blue Book to GAAFR

The publications of the National Committee on Governmental Accounting gained increasing recognition in practice throughout the 1950s and early 1960s. By the late 1960s, however, revisions were needed to reflect almost two decades of...