Gasb and Fasb Analysis Paper
Such standards are important to the efficient functioning of the economy because investors, creditors, auditors, and others rely on credible, transparent, and comparable financial information. The Governmental Accounting Standards Board was created in 1984 as an independent, professional body to establish standards of accounting and financial reporting applicable to state and local governmental entities.
It was formed after agreement by the Financial Accounting Foundation, the American Institute of Certified Public Accountants, the Government Finance Officers Association, the National Association of State Auditors, Comptrollers and Treasurers, and the seven organizations representing state and local government officials.
The difference between modified accrual accounting and full accrual accounting is that modified accrual accounting is a method under which revenues are recognized in the period they become available and measurable, and expenditures are recognized in the period the associated liability is incurred.
Most government accounting follows this method; and full accrual accounting is a system of accounting in which revenues are recorded when earned and outlays are recorded when goods are received or services performed, even though the actual receipt of revenues and payment for goods or services may occur, in whole or in part, at a different time. The difference between FASB and GASB is that the mission of the FASB is to establish and improve standards of financial accounting and reporting for the guidance and education of the public, including issuers, auditors, and users of financial information (Financial Accounting Standards Board, 2009).
The GASB mission is to establish 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 (Governmental Accounting Standards Board, 2009). Similarities and Differences: Both boards share the following objectives: 1. To be objective in its decision making and to ensure, insofar as possible, the neutrality of information resulting from its standards.
To weigh carefully the views of its constituents in developing concepts and standards. 3. To promulgate standards only when the expected benefits exceed the perceived costs. 4.
To bring about needed changes in ways that minimizes disruption to the continuity of reporting practice. 5. To review the effects of past decisions and interpret, amend or replace standards in a timely fashion when such action is indicated. The main difference between the two is that the GASB is specific to individual state legislatures and the FASB is on a federal level, so their scope is much broader.