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Re:Module 5 DQ 1

In order to maintain uniformity and reliability in financial reporting, the FASB and the GASB were established. The Financial Accounting Standards Board (FASB) was created in 1973 and has been responsible for creating and publishing public sector standards of financial accounting and reporting guidelines called generally accepted accounting principles [GAAP] (Lohrey, n.d.). The Governmental Accounting Standards Board, formed in 1984, does much the same but for governmental agencies. Both organizations were made to carry out similar functions, while the manner in which they achieve their goal can vary from time to time. One of the biggest manners in which they differ prominently is in the methods used to prepare their financial statements. GASB financial statements are prepared using the modified accrual form of accounting, which differs from FASB accrual or cash basis accounting (DeBenedetti, n.d.). Both the FASB and the GASB work to ensure that their client, whether it is a public company or a government organization, properly conduct[s] accounting and financial reporting activities in order to provide accurate and reliable information (Whitehead, 2017). A smaller difference ties in with this similarity is those that would use each type of information and why. Those that would be examining those financial statements under GASB would likely be citizens that are interested in what their governments transactions are; whereas the statements produced under FASB likely be analysts and potential investors that want to know the financial status of the business. For the most part, the differences between are reasonable given the difference between the two types of organizations that they cover, although there have been known comparability issues for areas such as colleges, between public universities (GASB) and private institutions (FASB).

References

DeBenedetti, J. (n.d.). The Difference in Accounting Practices Between GASB & FASB. Retrieved from http://smallbusiness.chron.com/difference-accounting-practices-between-gasb-fasb-79752.html.

Lohrey, J. (n.d.) The Difference Between FASB & GASB Effects on the Statement of Cash Flows. Retrieved from http://smallbusiness.chron.com/difference-between-fasb-gasb-effects-statement-cash-flows-76401.html.

Whitehead, S. (2017). GASB vs. FASB, Modified vs. Full Accrual Accounting. Retrieved from http://panmore.com/gasb-vs-fasb-modified-vs-full-accrual-accounting.