You have heard about the provisions of GASB Statement 45 and you have learned that the state of Texas fought the application of the standards. There are risks that the GASB might face if it decided to yield to the demand of Texas officials and cancel Statement 45. What opinion do you have on these two paragraphs? Please see below.

If GASB yielded to Texas officials' demands, GASB would have risked losing its independence. GASB is charged with setting standards to ensure comparability for all state and local governments.Therefore, it must base its Statements on what is best for all financial statement users and not just what a particular entity's laws and regulations allows. Texas officials' main problem with Statement 45 was due to Texas inability to fund liabilities longer than 2 years.Other states likely have similar limitations, but did not object.

In addition, Statement 45 did not require Texas to fund anything. It simply required that Texas report the unfunded liability, so that financial statements users will be aware about the likely, though not guaranteed, future expenses.If Texas had succeeded based on its flawed reasoning, then the GASB would likely have become irrelevant. I'm sure there is at least one state that can find or have a reason why a GASB statement conflicts with state law. Thus, GASB would likely have had to rescind every controversial Statement.In effect, the states would be dictating to GASB what it can and cannot consider generally accepted accounting principles.