What Is the Government Accounting Standards Board (GASB)?
The Government Accounting Standards Board (GASB) is a non-governmental organization that sets accounting reporting standards for state and local governments. The GASB is responsible for the Generally Accepted Accounting Principles (GAAP). The board aims to encourage comprehensible, reliable, transparent, and comparable financial reporting.
Basics
Creating accounting reporting standards for state and local governments in the United States is the sole objective of the Government Accounting Standards Board. As a private, non-governmental organization, it specializes in formulating generally accepted accounting principles.
What Is the Government Accounting Standards Board (GASB)?
Established in 1984, the GASB is an autonomous and impartial entity. Its primary objective is facilitating lucid, uniform, accountable, and comparable financial reporting for state and local governments. Similarly, the Federal Accounting Standards Board (FASB) fulfills a similar role for the federal government. These reliable financial insights play a vital role for taxpayers, municipal bondholders, legislators, and oversight bodies, shaping public policy and investment decisions.
GASB Functions
GASB's Transparent Approach
The Government Accounting Standards Board GASB adopts an independent and open process that fosters wide stakeholder engagement. It objectively evaluates and analyzes diverse perspectives. In June 2022, GASB initiated an Invitation to Comment, seeking public feedback on enhancing government financial statements to provide critical information on risk vulnerabilities and disclosure for state and local governments.
Board Leadership and Expertise
The GASB operates under a seven-member board led by a chair and vice-chair. Appointed by the FAF Board of Trustees for five-year terms, members serve up to 10 years. While the chair serves full-time, the vice-chair and the remaining five members contribute part-time. GASB members possess expertise in governmental accounting and finance, prioritizing the public interest in national accounting and financial reporting.
Oversight and Funding Mechanism
The Financial Accounting Foundation (FAF) Board of Trustees and the FASB oversee the GASB, selecting its board members. The GASB's funding primarily stems from accounting support fees paid by brokers and dealers engaged in municipal bond trading. This funding mechanism was established by Section 978 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
Enhancing Financial Reporting: The Joint Mission of GASB, FASB, and FAF
The GASB, alongside the FASB and FAF, shares a unified mission. Their collective aim is to establish and enhance financial accounting and reporting standards, providing valuable information to investors and financial report users. Equally important is the education of stakeholders on the effective understanding and implementation of these standards. To achieve this, the GASB draws upon diverse intelligence sources, informing its policy decisions.
Conclusion
The GASB aims to establish transparent and reliable financial accounting and reporting standards for state and local governments. Working alongside the FASB and FAF, the GASB strives to provide valuable information to investors and financial report users while prioritizing stakeholder engagement. With oversight from the FAF, the GASB is funded through accounting support fees and draws upon diverse intelligence sources to inform its policy decisions. Through its dedication to transparency and accountability, the GASB plays a vital role in shaping the nation's accounting and financial landscape.