Compliance often means following or obeying the legal authorizations for inflows and outflows of money such as taxes, borrowing, and administrative expenditures. These stipulations are frequently expressed in the adopted budget. Following laws such as prevailing pay scales constitute other types of compliance. In some cases, governments and business struggle with candidly revealing bad news about financial success, conditions, and compliance. Although governmental accounting and financial reporting are highly technical, the models that determine the characteristics of the reports are not chosen for pure technical or scientific reasons.
Selection is open to both technical and political forces.
Several different views have emerged in explaining what has shaped governmental accounting. One, and the most common one, is that the environment of government is considerably different from business and thus government needs different accounting rules, that is, different principles and standards. In this view, government is highly legalistic and needs an accounting system to track legal requirements. Preservation of democracy and lack of market forces create the need for this legally oriented model. In a sense this is a non-political view.