The Financial Accounting Standards Board
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GASB and FASB
Introduction
As we enter into the realm of government and not-for-profit accounting, we need to look at another standard setting board besides FASB. GASB, the new standards board we are becoming involved with, addresses the oversight, concerns, and issues that stakeholders require for dealing with governmental accounting. GASB and FASB possess many similarities as well as differences. GASB is standard setting board for local and state governments (Granof & Khumawala, 2011). FASB is the standard setting board for the private sector and not-for-profits (Granof & Khumawala, 2011).
GASB vs FASB
FASB, the Financial Accounting Standards Board is an organization that establishes standards for financial accounting and preparation of financial reports in the private nongovernmental sector (FASB, 2012). According to the GASB website, their purpose is to “establish and improve standards of state and local governmental accounting and financial reporting” (GASB, 2012). GASBs mission is to provide stakeholders with useful information of financial reports and to educate issuers, the public, auditors, and users of the governmental financial reports (GASB, 2012). GASB has three main objectives of accountability: interperiod equity, budgetary and fiscal compliance, and service efforts costs and accomplishments ((Granof & Khumawala, 2011). Unlike FASB, GASB requires that organizations under their jurisdiction include fund financial statements. FASB fosters valuable information to investors, employees, board members, and other stakeholders to enable them to analyze organizations and make informed decisions. GASB has the same mission of establishing standards to provide accurate decision-useful information but, the stakeholders are a little different than the ones affected by FASB standards. GASB stakeholders include municipal bond holders, tax payers, governmental citizens, legislators, and oversight boards (GASB, 2012). FASB and GASB also share similarities. GASB utilizes fund accounting for its governmental establishments and FASB utilizes fund accounting for its not-for-profit entities. The ultimate goals for both FASB and GASB are to offer objective comparative information regarding their specific entities. The end users might be of different backgrounds or need information for different reasons, but both entities strive to provide accurate decision-useful information.
Modified vs Full Accrual Accounting
Most individuals are familiar with the use of full accrual accounting as it pertains to private entities. The text states that full accrual accounting recognizes a transaction “when it has its substantive economic impact” (Granof &