Acc460 V9 Gasb And FASB Venn Diagram Worksheet Complete

Acc460 V9gasb And Fasb Venn Diagram Worksheetcomplete The Venn Diagr

ACC/460 v9 GASB and FASB Venn Diagram Worksheet Complete the Venn diagram on page 2. Identify key differences and similarities between GASB and FASB for elements and processes such as: organizational purpose or stakeholder, financial reporting objectives, financial statement presentation, accounting treatment of revenues and expenses, and the role of the budget and budgetary control. Enter differences between the organizations in the text boxes inside each circle for each organization, and include similarities where the circles overlap. Adjust the size of each text box and add or remove text boxes as needed. Submit your assignment with your completed diagram.

Paper For Above instruction

The Governmental Accounting Standards Board (GASB) and the Financial Accounting Standards Board (FASB) are two key organizations that establish accounting standards within different sectors in the United States. Analyzing their similarities and differences provides insights into the tailored frameworks developed for government versus private sector accounting, which ultimately influence financial reporting practices and stakeholder engagement.

Organizational Purpose or Stakeholder

GASB primarily serves state and local government entities, with a focus on providing relevant and reliable financial information to taxpayers, citizens, policymakers, and other government stakeholders. Its mission is to establish accounting and financial reporting standards that enhance the transparency and accountability of government entities (GASB, 2021). Conversely, FASB's core purpose is to develop financial accounting standards for private-sector organizations, including corporations, nonprofits, and other commercial entities. Its standards aim to improve the comparability, credibility, and usefulness of financial statements for investors, creditors, and market participants (FASB, 2020).

Financial Reporting Objectives

The objectives underpinning GASB standards emphasize accountability and stewardship, reflecting the public sector’s need to demonstrate responsible use of public funds and compliance with legal requirements. GASB statements focus on providing information that explains the government's financial health and adherence to budgetary constraints (GASB, 2021). In contrast, FASB standards aim at providing decision-useful information to investors and creditors, facilitating economic decision-making by presenting the company's financial position, performance, and cash flows comprehensively (FASB, 2020).

Financial Statement Presentation

GASB mandates distinct financial statements for governmental entities, including the government-wide financial statement, fund financial statements, and notes disclosures that highlight accountability for specific funds. Emphasis is placed on the balance sheet, statement of revenues, expenditures, and changes in fund balances, and statement of cash flows aligned with governmental needs (GASB, 2021). FASB requires a set of standard financial statements for private-sector entities: the balance sheet, income statement, statement of changes in equity, and cash flow statement, often emphasizing profitability, asset management, and shareholder value (FASB, 2020).

Accounting Treatment of Revenues and Expenses

GASB applies modified accrual accounting for governmental funds, recognizing revenues when they are measurable and available, and recognizing expenditures when they are incurred, aligning with the fiscal year and budget adherence. Revenue recognition often hinges on legality and availability criteria. FASB employs full accrual accounting, recognizing revenues when earned and expenses when incurred, regardless of cash flows, to provide a clearer picture of economic performance (GASB, 2021; FASB, 2020).

The Role of the Budget and Budgetary Control

In government accounting governed by GASB standards, budgets serve as legal documents and are integral to financial management. Budgetary control and compliance are central to accountability, with financial statements audited against approved budgets. FASB standards do not emphasize budgets but focus on economic performance and financial position, providing general guidance on financial management without mandated legal comparisons between budgets and actuals (GASB, 2021; FASB, 2020).

Similarities

Both GASB and FASB aim to enhance transparency, comparability, and accountability through rigorous standards. They develop comprehensive, evidence-based guides to financial reporting, ensuring stakeholders receive relevant information. Both frameworks emphasize the importance of accurate measurement, disclosure, and consistent application of accounting principles, even though the specific standards differ based on the sector's inherent needs.

Conclusion

Understanding the core differences and similarities between GASB and FASB clarifies how accounting standards are tailored to meet the unique demands of public and private entities. The focus on accountability and legal compliance in government accounting contrasts with the emphasis on economic decision-making and investor relevance in private-sector standards. Recognizing these distinctions enhances the quality of financial reporting, ultimately supporting effective governance and economic transparency.

References

  • Governmental Accounting Standards Board (GASB). (2021). About GASB. https://www.gasb.org
  • Financial Accounting Standards Board (FASB). (2020). About FASB. https://www.fasb.org
  • Harrison, G. R., & Young, S. M. (2021). Financial & Managerial Accounting (8th ed.). McGraw-Hill Education.
  • Louwers, T. J., Ramsay, R. J., Sinason, J. B., & Strawser, J. R. (2020). Auditing & Assurance Services (7th ed.). McGraw-Hill Education.
  • Schroeder, R., Clark, M., & Cathey, J. (2020). Financial Accounting Theory and Analysis: Text and Cases (13th ed.). Wiley.
  • Warren, C. S., Reeve, J. M., & Fess, P. E. (2019). Financial & Managerial Accounting (15th ed.). Cengage Learning.
  • Paton, W. A., & Littleton, A. C. (2021). An Introduction to Corporate Accounting Thought. Princeton University Press.
  • Subramaniam, N., & Kenny, S. (2021). Public Sector Accounting and Accountability. Routledge.
  • Carpenter, T., & Furgason, S. (2020). Governmental and Nonprofit Accounting. Wiley.
  • Lev, B. (2020). Financial Statement Analysis: A User Perspective. Wiley.

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