ABSTRACT
This chapter provides an awareness of the specific conditions that apply to public sector accounting entities as a result of their legal and institutional prerequisites. It insists to have knowledge about potential and primary users of governmental financial reporting. The development of accounting goes hand in hand with social and economic development in society. In the same way as the separation of ownership and control had a major impact on the development of private sector accounting, public sector accounting has affected but has also been influenced by the development of democracy. Although prerequisites may be partly different between different levels of public sector and different public sector entities, there are some unique characteristics that apply to entire public sector and considered regarding its accounting and financial reporting. The primary objective of public sector organizations is not to make a profit or generate return on capital, but to meet different political policy objectives and provide goods and services to citizens.
