GASB and FASB Analysis Paper
By Jennifer R Carlson
March 6, 2006
The Governmental Accounting Standards Board (GASB) is the board that "sets the accounting and financial reporting standards for state and local governments, whereas the Financial Accounting Standards Board (FASB) is the standard-setter for all other entities except the federal government." (Granof, 2003, Ch 1 pp6) The GASB promotes accountability and allows the public to know the facts in regards to the uses of the resources. Inter-period equity shows whether the current-year's revenues will pay for the current-year's expenditures. Budgetary and fiscal compliance make sure that the funds and/or resources were used within the guidelines of the entity's budget. Service efforts, costs, and accomplishments are shown in the financial reporting of the entities to help demonstrate the accountability with the governmental entity. (Granof, 2003, Ch 1, pp 13) The FASB sets the guidelines for non-governmental entities to provide the information on the profitability of the entity.
The cash flow statements are very similar in both GASB and FASB. They both show cash inflows/outflows relating to operating, financing, and investing activities. GASB cash flow statements divide financing activities into non-capital and capital and related financing activities. The acquisition of capital assets is a capital and related financing transaction in the GASB Cash Flows Statement rather than an investing activity. Interest expense on long-term debt is a capital and related financing activity in the GASB cash flow statement rather than an operating activity. Also, GASB Cash Flow Statements must be shown using the direct method (GASBS 34). (http://www.missouri.edu/~accterw/book/Chap007.ppt) All in all, GASB is similar to FASB because it derived from it.
Granof, M. (2003) Core Concepts of Governement and Not-for-Profit Accounting, 1e. John Wiley &...
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