GASB COMPARED TO FASB

GASB compared to FASB

GASB compared to FASB

It has long been affirmed that in order to measure the success of any particular financial endeavor it must be standardized and quantified. To this end external bodies establish standards that provide a conceptual framework and guidance when assessing the organizations success or failure at any time. The chief standard setting body for public financial accounting and reporting in the United States is the Financial Accounting Standards Board (FASB).

FASB establishes and improves standards of private financial reporting for the benefit of the data's end user. These end users may take the form of potential investors, shareholders and creditors (Avison 2000). However, because governmental organizations must also prepare fiscal outlooks and financial reports the question then becomes, how are the government's financial success or failure measured and who will set the guidelines for these measurements?

FASB answered this question by organizing the Governmental Accounting Standards Board (GASB) in 1984. GASB is considered FASB's counterpart in governmental accounting standards for both local and state agencies. 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 user. Additionally, both organizations must guide and educate the public on how the standards affect the financial reports they rely on for pertinent financial data (Chang and Osler 2004). Yet notwithstanding the abovementioned parallel goals, together they are entrusted with one of the most important functions encompassing the current accounting dynamic. Both the FASB and the GASB can establish GAAP or Generally Accepted Accounting Principles in equal standing. This regulatory power is a key point given that GAAP standards afford reporting guidance to the private and public accounting community.

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 (Taub 2004). Unfortunately, with politicians, organizations and institutions who want to ...