When a person reviews financial statements the format can be different for government and nongovernment businesses. The reason for this is the two types of businesses are regulated by different accounting standard boards, and choose accounting methods to meet their requirements. The Financial Accounting Standard Board (FASB) sets regulations for nongovernment entities and the Government Accounting Standard Board (GASB) is the government entities regulator. They have similarities and differences designed for the type of business they monitor. The financial statements are another area that can be confusing because most businesses will use accrual accounting methods, but government organizations use a modified version. To understand the similarities differences between GASB and FASB the following paragraphs will begin with these and follow up with the reason for the use and the differences in the accrual and modified accrual accounting methods. FASB and GASB
FASB and GASB were both established by the Financial Accounting Foundation (FAF) in 1973 and 1984 respectfully. “FASB was established to improve the standards of financial accounting and reporting for nongovernment entities” (FASB, 2012, p. 3). FASB differs from the GASB in whom they regulate. “The GASB is the independent organization that establishes and improves standards of accounting and financial reporting for U.S. state and local governments” (Facts about GASB, 2012, p. 1). Each of these accounting boards was established to help financial statement users to retrieve information about the organization useful to them. Other similarities are they are not-for-profit organization, whose board members are selected by the FAF. The primary objective of the FASB and GASB is that they help structure the financial information in each of their entities in a comparable manner. This allows financial...