February 19, 2009 | Read Time: 1 minute
As the Obama administration pushes banks that receive federal aid to be more public about how they spend government money, two professors suggest a simple idea: “[T]he beneficiaries of taxpayer financing should have to keep track of their money in the same way nonprofits must.”
In an opinion article in The New York Times, James Deitrick and Michael Granof, professors of accounting at the University of Texas at Austin, write, “Nonprofits use what is known as ‘fund accounting.’ Fund accounting requires that a separate set of books be maintained for all grants that are designated for a specific activity. The aim is to ensure that the resources are spent for their intended purpose.”
Some financial institutes have balked at such an approach, arguing that “[m]oney is fungible … and therefore they cannot readily distinguish between outlays of their own resources and those provided by the government. But that’s the type of doublespeak that would get the head of a town’s homeless shelter thrown in jail,” the professors write.
What do you think? Would charity accounting be a good model for banks that get federal funds?
