The Need for Both Gasb and Fasb for America’s Colleges and Universities

Only available on StudyMode
  • Download(s) : 33
  • Published : July 9, 2011
Open Document
Text Preview
THE NEED FOR BOTH GASB AND FASB FOR AMERICA’S COLLEGES AND UNIVERSITIES

The Need for Both GASB and FASB for America’s Colleges and Universities

The Need for Both GASB and FASB for America’s Colleges and Universities

The Financial Accounting Standards Board (FASB) was established in 1973 and has been granted the power to institute rules of financial accounting and reporting for businesses and not-for-profit organizations. The Governmental Accounting Standards Board (GASB), established 11 years later in 1984, took on a very similar role. This board has the power to institute rules of financial accounting and reporting for all governmental entities except for those on the federal level. With so many different colleges and universities in America today, it is important to know that higher educational state institutions follow GASB and independent institutions such as University of Phoenix follow FASB. Even though both GASB and FASB have its own mission when instituting new standards, the coexistence of these two standards boards result in recognition discrepancy, measurement, and disclosure that creates a difficult time for its users to compare and contrast the organization’s financial position.

Objective of the Two Standards Boards and How They are Similar and Different

All state and local governmental units and organizations including higher education institutions are subject to GASB standards. All other higher education institutions that are in the private-sector or not-for-profit business structures are subject to FASB standards. Both GASB and FASB are similar in that each has the authority to establish Generally Applied Accounting Principles (GAAP) to its appropriate organizations and entities. There are, however, many differences including the objectives and missions that each follow. According to Goldstein and Menditto, “FASB has a decision utility focus; its mission is to help investors and creditors make decisions. In contrast, because...
tracking img