Discussion (2 parts) Click the link above to respond to the discussion. If you n
ID: 2459656 • Letter: D
Question
Discussion (2 parts)
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"Accounting Standards for Government and Not-for-Profit Entities"
Participate in the following activities in order to complete the discussion:
Go to the GASB Website, located at http://www.gasb.org. Under the “About Us” tab, review “Mission, Vision, & Core Values”, “Facts about GASB”, and “Strategic Plan”.
Review the material on the GASB listening process, The Comment Letter, The Public Hearing, and the section on Task Forces and Advisory Committees, located at http://www.gasb.org/jsp/GASB/Page/GASBSectionPage&cid=1176156714545.
Go to the Financial Accounting Standards Board (FASB) Website section for Not-For-Profit Entities, located at http://www.fasb.org/jsp/FASB/Page/BridgePage&cid=1351027226246, and review the role of the FASB in setting standards for Not-for-Profits.
Briefly analyze the role of GASB and summarize the due process procedures in place for developing governmental accounting standards. In your analysis and summary, consider the stakeholder groups that benefit from governmental standards and how they might engage in the GASB process.
Briefly analyze the role of the FASB specific to not-for-profit organizations and summarize the due process procedures in place for developing not-for-profit accounting standards. In your analysis and summary, consider the stakeholder groups that benefit from not-for-profit standards and how they might engage the FASB process.
Explanation / Answer
Answer
The Financial Accounting Foundation (FAF), the Financial Accounting Standards Board (FASB), and the Governmental Accounting Standards Board (GASB) working jointly have developed a strategic plan.
The strategic plan recognizes that the FASB and the GASB are solely responsible for developing and establishing financial accounting and reporting standards. FAF management team provides strategic counsel and services that support the mission, activities, and independence of the FASB and the GASB.
The FASB, the GASB, and the FAF management develops the highest-quality financial accounting standards that promote financial reporting that provides investors, lenders, taxpayers, public officials, and other users of financial statements with a clear understanding of the financial performance and position of public and private not-for-profit organizations and state and local governments. It fosters better understanding among stakeholders as to how those standards should be applied and implemented.
The strategic plan describes four goals
The Governmental Accounting Standards Board (GASB) is the independent organization that establishes and improves standards of accounting and financial reporting for U.S. state and local governments. The GASB is recognized by governments, the accounting industry, and the capital markets as the official source of generally accepted accounting principles (GAAP) for state and local governments.
Accounting and financial reporting standards designed for the government environment are essential because governments are fundamentally different from for-profit businesses. The information needs of the users of government financial statements are different from the needs of the users of private company financial statements. Compliance with GASB’s standards is enforced through the laws of some individual states and through the audit process when auditors render opinions on the fairness of financial statement presentations in conformity with GAAP.
The GASB issues standards and other communications that result in decision-useful information for users of government financial reports. Users may include owners of municipal bonds, members of citizen groups, legislators and legislative staff, and oversight bodies. Those standards also help government officials demonstrate to their constituents their accountability over public resources. The GASB also works to educate the public, financial statement preparers, auditors, and users, about its standards and the information those standards require governments to present in their financial reports. In order to encourage broad public participation in the standards-setting process, GASB standards are issued only after completion of extensive and rigorous due process activities.
Before issuing its standards, the GASB follows the due process activities described in its published Rules of Procedure. The GASB’s stringent due process activities are designed to encourage broad public participation in the standards-setting process. These activities promote timely, thorough, and open study of financial accounting and reporting issues by the preparers, auditors, and users of financial reports. For many of the issues it addresses, the GASB:
• Appoints an advisory task force of outside experts
• Studies existing literature on the subject and conducts or commissions additional research if necessary
• Publishes a discussion document for public comment setting forth the issues or concerns being addressed and possible solutions
• Broadly distributes an Exposure Draft of a proposed standard for public comment
• Conducts public hearings and forums on its due process documents Significant steps in the process are announced publicly.
The GASB’s meetings are open for public observation and a public record is maintained. The GASB also is advised by the Governmental Accounting Standards Advisory Council. Transcripts of public hearings, letters of comment and position papers, research reports and other relevant materials on projects leading to the issuance of pronouncements become part of the Board’s public record and are available for inspection. In addition, letters of comment are available on the GASB website. To encourage public comment, discussion documents and Exposure Drafts are available on the GASB website.
The FASB has a long-standing commitment to the not-for-profit sector as part of the FASB’s standard-setting process for U.S. generally accepted accounting principles (GAAP). The FASB approved the creation of a Not-for-Profit Advisory Committee (NAC). In addition, the FASB’s NAC is supported by a standing Not-for-Profit Resource Group.
The FASB hears from all stakeholders interested in the financial reports of non public entities, including the preparers, practitioners, and users of those financial reports. Among those stakeholders is a broad range of users that include:
As part of its open decision-making process, the FASB asks for public feedback on Discussion Papers, Exposure Drafts, and other proposals that it issues at various stages of a technical project. The FASB tries to know thoughts of stakeholders regarding non public entity financial reports about a following issues.