The Similarity and Difference between FASB & GASB Financial Reporting Saintania Bien-Aime - Financial statements Essay Example
The accounting and financial reporting standards are one of the source that profit businesses and governmental not-for-profit organizations, which has been created by the Accounting standards Board (FASB). However, accounting and financial reporting standards that apply for state and local governments in America are created by the Governmental Accounting Standards Board (GASB). E. Wilson, J.
Reck & S. Kattelus (2010) conclude that “Specifically, the FASB sets standards for for-profit business organizations and governmental not-profit organizations; the GASB sets standards for state and local governments, governmental not-for-profit organizations” (p. 4). The intent of this paper is to compare and contrast Financial Accounting Standard Board, and Governmental Accounting Standard Board.
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CPA’s are responsible for knowing if the organizations are governmental or nongovernmental in order to apply General Accepted Accounting Principles (GAAP), because that will help them to follow the hierarchy of general accepted accounting standard when preparing a financial statement. The Similarity and Differences between FASB & GASB The Governmental Accounting Standards Board (GASB) and the Financial Accounting Standards Board (FASB) are describing as parallel organizations under the oversight of the Financial Accounting Foundation (FAF).
However, auditors need more guidance in order to audit and accounting of the AICPA under both Financial Accounting Standards Board and Governmental Accounting Standard Board, because it recommend for them to have governmental character. Under the Governmental Accounting Standards Board (GASB) financial reporting as sets a standard that allowed the content of the comprehensive annual financial statement reporting of state or local government reporting entity. In this paper, I will describe some important points of how these two organizations are similar and difference when reparing a financial statement report. Financial Accounting Standards Board (FASB) has created accounting standards for all entities that generating financial statements for external customers other than governmental entities, which include all the public companies, private venture and not-for-profit organizations.
However, for auditors to be effective preparing an external financial report; they must be guided by the sets of generally accepted accounting principles that applied for governmental and private not-for-profit organizations. L. Cunningham (2005) Comment “The Financial Accounting Standards Board, used the excess to fund the standard-setting activities of its sister organization Governmental Accounting Standards Board” (P. 291). An accounting of governmental entities is appointing by Financial Accounting Standards Board sisters’ businesses of the Governmental Accounting Standards Board, which cause the United States Government to establish accounting and auditing standards. Financial Accounting Standards Board mission is to created and enhance the standards of financial accounting and report.
Auditors need to provide important decision in order for the investor’s to review client’s financial reports. However, Financial Accounting Standards Board plays major parts of understanding independent sector of all other companies and professional organization. A private sector is established by Financial Accounting Standards Board, which cause these standards to be well-organized and performance of the economy investors, creditors, auditors, and certified public accountant to have an analogous financial statement reports.
Today, we see that the Financial Accounting Standards Board (FASB) has embraced the Post-Implementation report Review to help them increasing their processes project through the International Financial Reporting Standards. Financial Accounting Standards Board has think about the Post-Implementation Review report technical to see if the reviews are generalizations or alterations in U. S. and International Financial Reporting Standards generally accepted accounting principles are residually different. J. Pappas (2012) states “The Financial Accounting Standards Board does not plan to undertake a separate project to review the FIN 48 at this time, the Board plans to consider its technical in the future” (p. NA). A lot of stakeholder has benefit from the FIN 48, because they have more additional acknowledgment and principles of hesitant tax arrangement and more pertinent report information about tax misstatements. The governmental department of accounting does play an important role in the accounting profession market.
Governmental Accounting Standards Board (GASB) have expand manipulate, the most of major government entities in the United State. One of the incoherent ways is for the public to support Governmental Accounting Standards Board, just to apply in governmental entities by causative the money that Congress planned to encourage Financial Accounting Standards Board projects. C. Foltin (2010) stated “Governmental Accounting Stand (GASB) mission is to establish and improve standards for general purpose external financial reporting by state and local governments” (p. 2). When a government auditor or Certified Public Accounting are preparing project agenda, which include financial reporting, pension accounting and reporting, and codification of governmental generally accepted accounting principles, and public mandates reporting. The financial statement reporting has a lot of detailed parts; client’s requirement survey, statistical reporting, and financial reporting objectives to make budget decision.
Governmental Accounting Standards Board also has other type of statements that including into the financial report which is debt, generally accepted accounting hierarchy, intangible assets, financial risk, and performance reporting. (Foltin, 2010)Throughout this week lesson we are discussion the governmental agencies’ evaluation performance methods to see if there were properly presented at the financial statement reporting. Comprehensive Annual Financial Report (CAFR) is a government’s yearly budget report that has an introductory, financial, and statistical statement.
An auditor is required to conduct a government audits plan that applies the auditing standards that the American Institute of Certified Public Accounting. The Comprehensive Annual Financial Report is recommended information that’s municipal governments, and secondary market which are the markets for bonds after initial issuance, because if Governmental Accounting Standards Board failed to meet one of the primary objectives, that will cause the hierarchy generally accepted accounting principles a chance to affect.
Finally, this research paper has been an interesting topic for me because there was a lot of these things didn’t know before about Financial Accounting Standards Board and Governmental Accounting Standards Board. I learned that a certified public accountants of Financial Accounting Standards Board organization needs to prepare a disclosures of financial complex equity transactions, impaired assets, debt and consolidations, which need to be review correctly into a balance sheets, income statements of cash flow.
However, an auditor that in a Governmental Accounting Standards Board organization needs to prepare a Comprehensive Annual Financial Report that contains an introductory, financial, and statistical section. When an auditor or certified public accountants have a clear understanding about those both organizations, which will help them to serve the client’s better without any error or fraud taking place in the audit plan reports.
Cunningham, L. A. (2005, November). Private standards in public law: copyright, lawmaking and the case of accounting. Michigan Law Review, 104(2), 291+. Retrieved April 8, 2012from: http://go.galegroup.com.ezp-01.lirn.net/ps/i.do?id=GALE%7CA139521845&v=2.1&u=lirn_crevc&it=r&p=GPS&sw=w Facts about FASB. (n.d.) Retrieved April 6, 2012 from: http://www.fasb.org/facts Foltin, C. (2010, February). A long and winding road: 25 years of GASB. The CPA Journal, 80(2), 22+. Retrieved from http://go.galegroup.com.ezp-01.lirn.net/ps/i.do?id=GALE%7CA220512983&v=2.1&u=lirn_crevc&it=r&p=GPS& Pappas, J.C. (2012). FASB Responds to Financial Accounting Foundation’s Post-Implementation Review Report on FIN 48. Retrieved April 6, 2012 from: http://www.marketwatch.com/story/fasb-responds-to-financial-accounting-foundations-post-implementation-review-report-on-fin-48 Wilson, E., Reck, J. &