Comparison of GASB and FASB Standards

School: University of Phoenix - Course: ACC 460 ACC460 - Subject: Accounting

Identifykey differences and similarities between GASB and FASB for elements and processes such as: Organizational purpose or stakeholder Financial reporting objectives Financial statement presentation Accounting treatment of revenues and expenses The role of the budget and budgetary control FASB: FASB standards, on one hand, are created by the Financial Accounting Standards Board (FASB) and they apply to all public companies. The FASB board is overseen by a board of trustees called the Financial Accounting Foundation or FAF. This board is made up of tax preparers, auditors, government officials, academics, regulators and more. "Establishes financial accounting and reporting standards for public and private companies and not-for-profit organizations that follow Generally Accepted Accounting Principles (GAAP)." Required Reporting Statements for Non-profits: Statement of Financial Position FASB sheets must include a balance sheet, an income statement, a statement of cash flows and a statement of stockholder equity. GASB: GASB standards, on the other hand, are created by the Governmental Accounting Standards Board (GASB) and they apply to state and local governments. Established in 1984, theGovernmental Accounting Standards Board (GASB)is an independent, private-sector organization that develops and issues accounting and financial reporting standards for federal agencies and the U.S. state and local government. Interestingly, the GASB was actually formed out of concerns that FASB standards were not sufficient for the needs of local and state governments. That said, GASB also follows GAAP standards. The GASB is also overseen by the Financial Accounting Foundation (FAF). It is also advised by theGovernmental Accounting Standards Advisory Council (GASAC), an organization that was established by the FAF's Board of Trustees to advise the GASB on its agenda, priorities and procedural matters. The collective mission of the GASB, the FASB and the FAF, according tothe FASB website,is, "to establish and improve financial accounting and reporting standards to provide useful information to investors and other users of financial reports and educate stakeholders on how to most effectively understand and implement those standards." Required reporting Statements:Government: Statement of Net Position The GASB sheets must be more detailed as government entities must provide more detailed analyses. For government accounting, government organizations must also put together a Comprehensive Annual Financial Report (CAFR). This is not required for non-profits. BOTH:

Both the FASB and the GASB board are overseen by a board of trustees made up of accounting experts with varied backgrounds. Simplify accounting and financial reporting processes. Ensure that financial reporting activities are both accurate and reliable. Help stakeholders make informed decisions. Help entities accurately track their financial positions. Ensure that finalized financial reports are accurate and beneficial to end users aka the public. Required reporting statements: These statements are ultimately balance sheets and they will represent assets, summarize asset aand liabilities and assess the financial health of the government body. Recommend modified accrual accounting. Using modified accrual accounting, entities can integrate current cash flows and expected cash flows. This can help them more accurately describe their financial situation, since it also allows them to take into account things like expected income, future budget funds, future sales of assets and expected tax revenue.