By LeaseCrunch® on September 22, 2021 at 9:15 AM
The Governmental Accounting Standards Board, or GASB, was established in 1972 in order to create accounting and reporting standards that would foster visibility and clarity in finance reporting. The principles GASB creates are honored by both state and local governments in the US, and seek to keep businesses and governments accountable (literally) to the benefit of taxpayers, public officials, and investors.
GASB is sometimes pronounced “Gasbee”, not unlike the Fitzgerald tycoon.
What is the Purpose of GASB?
Besides reviewing existing and establishing new standards in accounting, the GASB also works to educate the public about its standards. They host discussions, speeches, and roundtables, and issue user guides to help taxpayers understand issued financial statements.
How Does GASB Work?
The GASB is made up of seven board members, six of whom are part-time board members with one full-time chairman. The GASB staff supports the board in its task forces and efforts to improve accounting standards wherever possible. The Governmental Accounting Standards Advisory Council, or GASAC, is another important part of the GASB. Composed of around 30 experts in various accounting-related fields, this group advises the GASB on arising issues, new agenda items, and other matters.
The GASB gets funding mostly from accounting support fees paid by brothers and dealers who trade in municipal bonds.
How Many GASB Statements are There?
There are 97 GASB standards total that are designed to educate and guide the public on financial reporting and accounting. However, these standards are constantly being monitored, updated, and reviewed. Check out some of the latest changes here:
How are GASB Standards Developed?
The GASB is shouldered with the responsibility of setting the highest-quality of standards, and to do so they utilize a process called the “Rule of Procedure”. The procedure is designed to encourage broad public participation in the standard-setting process, as these wide-reaching financial matters affect everyone.
For most issues, the GASB identifies an accounting problem and how to solve it. They collect information by speaking to those most affected by the problem; usually a consortium of companies, governments, auditors, and/or investors. The board consults with advisory academics and experts to cross-examine their findings with modern accounting theory.
After the consultation, the board does its own research and commissions additional research if necessary before publishing a discussion document outlining the issues and possible remedies, so the public can have their voice in the matter. They then move on to broadly distribute an exposure draft of a specific proposed standard. Lastly, the GASB conducts public hearings on the due process documents.
After the new standard has passed through these stages, the GASB works hard to educate the public on the changes to provide the smoothest transition possible.
GAAP VS GASB
With the similarities in acronyms, you may find yourself asking “Is GASB GAAP?”. While they overlap, they are not quite identical. The Governmental Accounting Standards Board (GASB) is the organization that determines and updates generally accepted accounting principles (GAAP).
Should I Use GASB or FASB?
The GASB and the FASB (Financial Accounting Standards Board) are very similar when it comes to overall intent. They both exist to develop and implement clear and informative accounting documentation standards, or GAAP.
However, the scopes in which they do this differ. GASB deals with financial reporting by government entities, while the FASB ensures that the rules for private-sector accounting are followed. They are both independent, non-governmental organizations that are components of a non-profit accounting standard-setting group that also includes the Federal Accounting Foundation (FAF), the Financial Accounting Standards Advisory Council (FASAC), and the Governmental Accounting Standards Advisory Council (GASAC).
Would you like to know more about the FASB? Check out these other resources:
- Takeaways from the FASB’s Recent Lease Standard Activities
- FASB Amends the New Lease Standard
- FASB Votes Yes on Lease Standard
Who Has to Follow GASB?
GASB’s scope is US state and local governments, as well as other municipal-type entities, such as airports and some hospitals. These entities are required to follow the standards set by GASB.
To ensure that the government is following these standards, the Government Accountability Office (GAO) has established auditing standards for federal government agencies.
Need Help With GASB?
You’re in the right place. LeaseCrunch is here to provide you with more resources. Check out our educational information to stay updated with the latest news on the GASB and other accounting organizations and standards. Feel free to also reach out to us today with any questions