GASB

Definition

The Governmental Accounting Standards Board (GASB) is an independent, private-sector body that establishes and improves standards of accounting and financial reporting for U.S. state and local governments. These standards, commonly referred to as Generally Accepted Accounting Principles (GAAP) for governments, are intended to ensure consistency, transparency, and accountability in governmental financial reporting.

Examples

1. GASB Statement 34: One of the most significant changes implemented by GASB, Statement No. 34 introduced comprehensive financial reporting requirements, including a management’s discussion and analysis (MD&A) section, full accrual accounting, and enhanced fund reporting.
2. GASB Statement 68: This statement outlines standards for accounting and financial reporting for pensions, requiring governments to report the full extent of their pension obligations in their financial statements.
3. GASB Statement 87: This statement changes the way leases are accounted for, moving from an “operating versus capital lease” distinction to reporting most leases similarly to the current treatment of capital leases.

Frequently Asked Questions

What is the purpose of GASB?

The primary purpose of the GASB is to set and improve standards of state and local governmental accounting and financial reporting that will result in useful information for users of financial reports and guide and educate the public, including issuers, auditors, and users of those financial reports.

How does GASB impact local governments?

GASB impacts local governments by providing a framework for financial reporting that enhances the consistency and quality of financial information. This allows for more effective oversight, better decision-making by public officials, and higher levels of transparency and accountability to the public.

Who oversees the GASB?

The GASB operates under the oversight of the Financial Accounting Foundation (FAF), which ensures that GASB operates with independence, integrity, and objectivity.

Why are GASB standards important?

GASB standards are important because they provide a single, authoritative, and consistent set of guidelines for financial reporting for governments. This consistency helps to ensure that financial statements are comparable, transparent, and reliable, which is essential for accountability and informed decision-making.

Related Terms

1. GAAP (Generally Accepted Accounting Principles): These are the standards used to prepare and standardize financial statements issued by publicly traded companies, private businesses, nonprofit organizations, and governments.
2. Financial Accounting Standards Board (FASB): A private, non-profit organization standard-setting body whose primary purpose is to establish and improve generally accepted accounting principles within the United States in the public’s interest.
3. Accrual Accounting: A method of accounting where revenue and expenses are recorded when they are earned or incurred, regardless of when cash transactions occur.
4. Management’s Discussion and Analysis (MD&A): A section of a company’s annual report in which management provides an overview of the previous year’s operations and how the company fared financially.

Online References

• GASB Official Website
• Financial Accounting Foundation (FAF)
• Government Finance Officers Association (GFOA)

Suggested Books for Further Studies

1. “Governmental and Nonprofit Accounting: Theory and Practice” by Robert J. Freeman, Craig D. Shoulders
2. “Accounting for Governmental and Nonprofit Entities” by Jacqueline L. Reck, Suzanne L. Lowensohn
3. “Governmental GAAP Guide” by Eric S. Berman
4. “An Introduction to Governmental Accounting and Financial Reporting” by Ralph S. Polston

Governmental Accounting: GASB Fundamentals Quiz

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