Gasb_and_Fasb_Analysis

GASB and FASB Analysis Paper University of Phoenix ACC/460 Government and Nonprofit Accounting Silvana Moffitt April 04, 2011 GASB and FASB Analysis Paper GASB and FASB have plans and objectives regarding reporting procedures for specific organizations. GAAP exists, but how nonprofit and governmental agencies record financial transactions and financial information differs from other entities. Such differences are outlined by the appropriate accounting standards board in direct relation to the type of business or organization. Governmental Accounting Standards Board (GASB) was created with the purpose of improving standards of state and local governmental accounting and financial reporting. By establishing and improving such standards, the GASB seeks to accomplish useful information for users of financial reports along with guiding and educating the public, which includes issuers, auditors, and users of such financial reports (“Mission, Vision, and Core Values“, n.d.). Financial Accounting Standards Board (FASB) was created with the purpose of improving standards of financial accounting and reporting that foster financial reporting by nongovernmental entities that communicate decision-useful information to investors and other financial report users (“Mission of the FASB“, n.d.). The GASB’s primary objective is to set and implement generally accepted accounting standards specifically for nonprofit and governmental organizations, whereas the FASB’s primary objective is to set and implement financial reporting standards for all other businesses not classified as governmental or non-profit agencies. The primary focus of GASB is to generate financial statements catered to its users, who are the donors, whereas the FASB focuses primarily on reporting all financial transactions, thus reporting the amount of revenue and profit generated. Both boards look to establish and implement the most efficient way of financial reporting according to the organization classification, for profit or not-for-profit and governmental organizations. Modified accrual basis of accounting is used by a government agency that combines accrual-basis accounting methods with cash-basis accounting methods. Organizations using modified accrual basis of accounting recognize revenues when they become available and measureable, not before. Expenditures are recognized in the period in which the related liability is incurred. The full accrual method of accounting is a method that measures the financial position of a company by recognizing transactions when they occur rather than when cash is received. The primary difference between modified accrual basis accounting and full accrual method of accounting is the time at which transactions are recorded; before payment is received or at the time payment is received. Although the GASB and FASB are separate accounting standards boards, they have defined motives and objectives. The two boards are similar in that they have set rules for specific organizations; GASB is geared toward governmental and nonprofit organizations and FASB focuses on all other organizations. Despite the differences in organizations and methods used, the standards are clearly outlined by the respective board leading to successful financial reporting according to the standards set forth by the GASB and the FASB. References Mission, Vision, and Core Values. (n.d.). Retrieved April 3, 2011, from http://www.gasb.org/jsp/GASB/Page/GASBSectionPage&cid=1175804850352 The Mission of the Financial Accounting Standards Board. (n.d.). Retrieved April 3, 2011, from http://www.fasb.org/facts/index.shtml#mission