Financial Accounting Standards Board Analysis Paper

Governmental Accounting Standards Board and Financial Accounting Standards Board Analysis Paper
ACC/460
October 28, 2013

Governmental Accounting Standards Board and Financial Accounting Standards Board Analysis Paper
The purpose of this paper is to review, compare, and show the contrast between the two accounting standard boards; Governmental Accounting Standards Board (GASB), and the Financial Accounting Standards Board (FASB). The objectives of both Boards will be discussed as well as similarities and differences with each. The topic will then review modified accrual basis of accounting and how it differs from full accrual accounting.
Governments have unique characteristics which require a different accounting guideline
Additional objectives include information about financial sources and how the funds are spent. The financial reporting should provide users with information about Government financed activities and if it has met its cash requirements. It should also include; if entities financial position has improved or deteriorated, the financial position and condition of government entity, and any legal or contractual restrictions or risks of resources.
FASB is used for not-for-profit entities and the objectives are similar to GASB since they also have a specific audience they must be accountable to. The objectives of this board are to provide information that is useful to potential and present providers regarding the allocation of funds and if the agency has the ability to provide the services necessary to the organization. It must provide documentation describing how management has discharged responsibilities and their own performance. Economic resources and obligations need to be included along with any changes in such. The financial report should also include how the organization spends the funding, borrowing or repayment of funds, performance and accomplishments, and other factors that may affect the liquidity of the
When the organization provides a service it will then record the income earned. The same process applies when a purchase is made, and it will record the expense. This method is helpful for an organization that wants to keep track of income and expenses as they occur. With the modified accrual basis, the income earned is recorded just like in full accrual accounting however; when an expense occurs, it will only be recorded when it has been paid. This method allows for more financial flexibility since expenses are not recorded until