The relationship between the Governmental Accounting Standards Board and the Financial Accounting Standards Board is a small red line. There has been a much disputed power struggle between the two entities because they are both able to establish generally accepted accounting principals, and they both posses the authority to do so. Due to this fact problems arise when they provide different answers to the same question. The ideal solution would be to integrate both bodies into a single organization that could set forth the same rules and regulations and no longer be in conflict with one another. Unfortunately, with politicians, organizations and institutions who want to stay in control, this will not happen and the only hope is that possibly the Financial Accounting Foundation flex their muscles and influence the FASB and the GASB to come together in their visions and coordinate their efforts. One difference between the two organizations is that the rules of the GASB need not apply to that of FASB. If the GASB had not covered an accounting topic that the FASB had, then the FASB standards would be used by the government entities. This sets up kind of like a default so that there are not so many different rules and possibly double standards. Under the rules of the FASB, SFAS No. 87 Employers Accounting for Pension must be followed by the financial entity. This is to establish measurement and display standards related to pensions. GASB No. 4 was issued by GASB, shortly after SFAS No. 87, which concludes that the standards established by SFAS No. 87 do not have to be followed by government entities.
The GASB and the FASB both have the authority to create rules, with the GASB having the ability to create rules that override the FASB. There are many similarities between FASB and GASB. As previously mentioned, both boards are given the authority to set standards regarding financial reporting that will result in useful information for the end users. Additionally, both...
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