Question

This chapter may feel more like home to all of you. But wait GASB (and even FASB) have different names for the statements. For example, the Balance Sheet becomes the Statement of Net Position.

Are the names different of a reason beyond a different entity?

Answer 1

Financial Accounting standards board (FASB) and Govt. accounting standards board (GASB) both are the institution to regulate the accounting standards in US. FASB makes standards for private entities in US whereas GASB makes standards for govt. entities in US. The objective of FASB is to provide financial statements in a manner which help the investors and creditors in making their decision about the financial health of the company whereas main objective of the GASB to set accountability of govt. entities.

Both of the above boards are liable the generally accepted accounting principles in US among govt. and non govt. entities.

Name of financial statement and disclosures therein and entities using them are different. For example where FASB requires the balance sheet when GASB called the balance sheet as statement of net assets. GASB require that the current liabilities to be shown separate from non current liabilities and current assets to be shown separate from non current liabilities although FASB provides for this but requires not this. GASB requires separate disclosures for depreciable and non depreciable assets but FASB not require this.

FASB classified net assets in three categories as permanently restricted, temporarily restricted and unrestricted whereas GASB classified net assets in two categories like unrestricted and restricted only. So there is not only difference in names of financial statements both boards requires but also in disclosures required there in.

On front of cash flow FASB has three categories like cash flow from operating activities, investing activities and financing activities whereas GASB has four categories like operating , investing, non capital financing and capital financing. FASB permits both direct and indirect method of preparing cash flow whereas GASB only permits direct method for preparing cash flow. So again difference exists.

FASB requires full accrual accounting whereas GASB requires modified accrual accounting and this is the another difference between GASB and FASB.

GASB and FASB are similar in their objective for establishing standards, principals, rules for accounting but they have difference on front of their users, approach, statements and disclosures.

For example a private hospital has to follow FASB and a govt. hospital has to follow GASB. Sometimes it makes a problem because statement of private and govt. hospital are not comparable as they are using two different standerds.

So from the above explanation it is clear that FASB and GASB not only have different names for financial statement but also different in disclosures, methods, rules etc.