Question

What view or additional meaningful response do you have on these paragraphs? Please see below.

GASB was established to provide uniformed governmental accounting principles for states and local governments to utilize. If GASB gave in to the rebellion of Texas officials for not complying with Statement 45, it would be similar to parents giving in to their misbehaved children. GASB would lose their authority, power, and trust from the public. If GASB allowed Texas to follow their own accounting rules, other states may follow in their footsteps, and then GASB’s authority would be diminished and no one would be following GAAP. States will recognize that GASB can be easily influenced and choose to do their own specific reporting methods.  

One of the main reasons Texas refused to comply with GASB 45 was due to the fact that they felt that it was “impossible to accurately project health care costs as far into the future as GASB requires” (Cheney 2). I’m sure a couple of states have difficulty estimating health care costs, but they still manage to do so regardless because if states don’t comply with GASB, then this will negatively impact states’ credit worthiness and bond rating.  GASB establishes and implements their standards because they know that it will result in organized and uniform governmental accounting. GASB doesn’t make rules just for the sake of making rules, but the rules always have meaning. GASB 45 requires governments to use the accrual accounting method to report OPEB as its more efficient than using the pay-as-you-go basis. GASB believes Statement 45 is the best course of action for public entities and everyone should comply.  

Answer 1

Govermental Accounting Standard Board (GASB) goal on revenue and expenses recoginition is to improve the information and make information more reliable, consistent & comprehensive.

One of the purpose of accounting is comparability for user to make decision & for uniformity of accounting participants.Accordingly the GASB is making rules for uniform govermental accouting.

Facts:

Statement 45 requires requires governments to use the accrual accounting method to report OPEB as its more efficient than using the pay-as-you-go basis.

Texas refused to comply with GASB 45 was due to the fact that they felt that it was “impossible to accurately project health care costs as far into the future as GASB requires”

Solution

Texas should comply with GASB 45 as accordingly estimate project health care cost on acturial basis and record in books. It would be beneficial for both user & maker of books of accounts.

If every state starts following its own accouting principles there will be no reliability on the information provided by the maker of books of accounts. So for the benefit of users the  authorities should follow GASB.