...GASB 68: An Examination of Affects to the Pension Problem Including Stakeholder Interests Private retirement systems are regulated by the Pension Benefit Corporation (Employee Retirement Income Security Act of 1974); state and local governments are not subject to federal regulation but rather voluntarily comply with GASB standards. (Mattrell, 2013) With all the newsworthy stories involving public pensions, analysts were becoming increasingly critical of GASB regulation over the pension systems. When compared to the requirements of the private retirement systems, it was lacking in transparency. Thus, GASB replaced statement 27 with 68. Government entities with a financial period ending June 30, 2015 will be first to experience the implementation of GASB 68. Many feel that GASB 68 is part of the solution for the ever-increasing public pension crisis in the United States but is reporting for the first time ever in most cases a rather large Net Pension Liability (NPL) on the face of the financials going to solve the problem of underfunded pensions. Employees within the public sector generally enjoy a rather generous pension when compared to others but when they are looked at for their sustainability they fail miserably. Chicago retirement system for teachers, fire fighters and others us underfunded by nearly $24 billion, with residents facing potential 150% increase in property taxes. (Birrer, 2014) Public pension systems in the United States are in need of change if they...
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...FASB and GASB Analysis Paper ACC/460 Carolyn S. Lundy 5/14/2012 Victoria Holmes The FASB and GASB share something’s in common but they function very differently. Their similarities include both operating as a component of the FAF. The Financial Accounting Foundation (FAF) is the organization that has over sight over the FASB, GASB, FASAC and GASAC. Under each of their standards, they both have to look over all letters, comments and concerns before making any decisions and in some cases can be made available to the public. Here is where they differ, the FASB has the authority to make and set any new accounting standards to be put in place, which will be recognized by the Securities and Exchange Committee (SEC). The GASB standards are not recognized to be any formal law or ruling, but its standards can be enforced by the individual states that choose the right to. The GASB is solely public and there is unlimited access. In fact, the GASB encourages the public to become heavily involved in their meetings. You can find some records of what will be discussed through the GASB website on the say the meeting will take place. The FASB reports all nongovernment information that will help private entities make the correct accounting decisions. Under the respective standard process, the FASB houses 7 rules that must be in place, the most important seemingly to be that the Board cares and puts the issues of the stakeholders/shareholders first. As with the GASB, they send those to...
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...GASB and FASB Analysis Paper ACC/460 The Governmental Accounting Standards Board and the Financial Accounting Standards Boards were put in place to assist in regulating the private sector, federal, and state and local governments. These regulations that are in place are to hold he sector accountable for its accurate financial reporting and documentation. I ask how these two divisions differ in its objectives and how to they regulate each party it governs. The Governmental Accounting Standards Board oversees the federal, state, and local governments with the basis of accountability. With that the GASB holds the government accountable to the citizens it represents. This means the government entities must show its constituents the money being raised is going to exactly what it was claimed for. An example of this would be a raise in taxes to assist in making gasoline safer for the environment. The GASB has broken down this accountability into three sub-objectives, the first is interperiod equity. Interperiod equity is a means of financial reporting that determines if there is enough current year money to pay for the current year needs. It also explains whether or not individuals in need of certain governmental services were pushed to the taxpayers. The second sub-objective is budgetary and fiscal compliance meaning that this reporting explains where funds came from to take care of services needed by the citizens. The third and final us service effort costs and accomplishments...
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...Roles of GASB and FASB GASB works to create standards for accounting of state and local governments by determining what pieces of data are necessary to provide useful information to citizens. FASB creates standards for all business and government entities to follow. GASB monitors government entities and sets the standards for local and state governments, while FASB works to help investors and creditors make decisions from the rules regulating the accounting standards of private entities. GASB helps to identify how accounting should be handled for receipts of funds that come from donations, grants, penalties, fines, and taxes. Funds received through business practices would need to be classified under GASB and FASB in government sectors, but if in a private entity it is only required to follow FASB. There are many differences between the GASB and the FASB as to which statements must be used, and for what reasons. As for the GASB a statement of net assets is used in exchange for the FASB’s balance sheet. A similar report called the statement of financial position is available for use by FASB but is not required. Net assets can be recognized under FASB as unrestricted, temporarily restricted, or permanently restricted, while GASB also uses unrestricted and “restricted or invested in capital assets, net of related debt” (GASB). The two boards work hand in hand to make sure that rules are established and updated and standardized for business, government, and non-profits....
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...The Essential Structure of GASB William V. Clark ACC 380 Accounting for Government & Not-For-Profit Organizations Instructor Clements April 18, 2014 The Governmental Accounting Standards Board, known as GASB, is the source of Generally Accepted Accounting Principles, (GAAP) which is used by Local and State governments in the United States. The purpose of this organization is to improve and create accounting and reporting standards. This would include Measurement Concepts, Measurement Approaches, Measurement Attributes, and Fair Value Measurement and Application. (www.GASB.org) The GASB Concepts Statements are intended to provide an essential supporting structure (framework) of interrelated objectives and fundamental concepts that can be used as basis for establishing consistent financial reporting standards, by utilizing these four methods. (www.GASB.org) GASB uses a measurement approach in order to determine whether an asset or liability that is presented in a financial statement...
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...GASB and FASB Analysis The Governmental Accounting Standards Board (GASB) and the Financial Accounting Standards Board (FASB) each contain an imperative position in the domain of accounting. Persons who desire to retain a career in accounting are compel to acquire a profound understanding of both standards boards. Accordingly, the pursuing analysis will elucidate the objectives for the GASB and FASB as well as illuminate the similarities and differences among the two standards boards. In addition, the assessment will depict by which the modified accrual basis of accounting divaricates from full accrual accounting. The GASB aims to formulate and enhance principles of state and local governmental accounting and monetary reporting. Thus will bring about beneficial information of financial documents for users as well as lead and teach the civic, which comprises issuers, auditors, and users of financial reports (Governmental Accounting Standards Board [GASB], n.d.). GASB goals of responsibility are interperiod equity, spending and financial submission, and service endeavors and achievements through evaluating financial system (economy), productiveness, and efficacy. The FASB’s ambition is to formulate and enhance guidelines of financial accounting and reporting, which promote financial reporting by nongovernmental (private sector and not-for-profits) establishments that supplies ruling-constructive information to shareholders and additional persons making use of financial reports...
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...facts that may lead to public debate. Furthermore, GASB established two additional objectives stating that “financial reporting should assist users in evaluating the operating results of the government entity for the year… and assist users in assessing the level of services that can be provided by the government entity and its ability to meet its obligations as they become due” (Granof & Khumawala, 2011). The FASB emphasizes that its objective is focused on financial reporting to users who authority to prescribe the information they want and users relying on the information management communicates to them to make economic decisions (Copley & Engstrom, 2007). The FASB stresses the objective of financial reporting is to provide information to present and potential resource providers in making rational decisions about the allocation of resources and its ability to provide services. Additionally, the FASB objectives state financial reporting should provide information in assessing how managers have performed, the entity’s economic resources, obligations, and net resources, and the effects of transactions, events, and circumstances that affect resources. Objectives for both the GASB and FASB are similar in many ways, both work together, along with the FASAB, to adopt regulations for GAAP, and both were created by the FAF for the standard setting process. However, the primary difference is how budgetary compliance is viewed. GASB views budgetary compliance as law, the most important...
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...The college that I was required to give you a final Project was with Lee College which is a not-for profit college. There assets will be categorized under the FASB 116 & 117. This would be the category that they would need to categorize there assets. As per the graph you will see that the columns used to classify the revenue, assets was Unlimited, Temporarily Limited, and Permanent. When using the columns listed above they should be able to record income assets correctly just in case they are required to provide documentation for the Charity. As you have seen above Lee College provided several different reports which will assist them in the way the Activity , Unlimited Earnings, Expenditures as well as the other Alternations in Unlimited Ney Assets, and a report of Alterations in Net Assets are recorded. Let keep in mind that the report of Earnings , Expenditures as well as the other Alterations is considered to be unlimited Net Assets the expenditures are Academic, General, and Auxiliary activities. We should also keep in mind that they have an additional report that is called the report of Alterations which shows the net assets was completed since it is need to demonstrate alterations in Lee Colleges Temporarily Limited, with permanently limited Net Assets. Be aware that a lot of the assets will not be shown on the Net Assets side of the reporting. Per the enclosed information is shows that Lee College has a private not-for-profit college and can’t seem to be to rich...
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...and Standard Setting by the SEC, FASB, IASB, and, GASB Abstract In the accounting industry there are different organizations that have been established to design, implement, and oversee accounting standards and financial presentation processes. Such organizations include the Securities Exchange Commission, SEC, the Financial Accounting Standards Board, FASB, the International Accounting Standards Board, IASB, and the Governmental Accounting Standards Board, GASB. Each of these organizations works closely with the others to attempt to provide the accounting industry with a similar, if not identical, set of accounting standards that align with those of the U.S. GAAP – Generally Accepted Accounting Principles and IFRS – International Financial Reporting Standards. The strengths and weaknesses of these organizations identify their similarities and differences and enable the organizations to continue to grow with the finance and accounting industries. In the accounting industry there are several different organizations specifically designed to set, maintain, and regulate accounting standards and financial statement presentation. Among these organizations are the U.S. Securities and Exchange Commission, or SEC, the Financial Accounting Standards Board, or FASB, the International Accounting Standards Board, or IASB, and the Governmental Accounting Standards Board, or GASB. Each organization was established to carry out specific...
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...Governmental Accounting Standards Board (GASB) and Financial Accounting Standards Board (FASB) Analysis Paper Accountants or individuals, who put the financial statements together, need the knowledge of the two different accounting standards board. The Governmental Accounting Standards Board (GASB) and the Financial Accounting Standards Board (FASB) differ from each other and are similar in different ways and individuals need knowledge of the differences and similarities. GASB and FASB allow use of the modified accrual basis of accounting or the full accrual accounting for government and not-for-profit organizations. Knowing the differences between the two methods and the meaning are important. GASB and FASB Similarities GASB and FASB accounting are sets of objectives that proprietorship, government, and not-for-profit organizations follow in preparing financial statements. According to Weygandt (2008, p. 17) “both the GASB and the FASB have established objectives that circumscribe the functions of financial reports.” GASB and FASB objectives show whether a company is making enough profit to pay for expenses throughout the year, allows investors information to decide whether to invest or not, and how well the company budget complied throughout the year. Also, the two accounting standard boards show whether management is complying with all aspects of the objectives. GASB and FASB accounting have differences that individuals need knowledge about to prepare financial statements...
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...Governmental and Nonprofit Accounting: Theory and Practice, 10e (Freeman) Chapter 1 Governmental and Nonprofit Accounting—Environment and Characteristics 1. Which of the following would not be considered a government or nonprofit organization? A. A software company that sells software exclusively to state and local governments. B. A public elementary school. C. A church. D. A private trust organized for charitable purposes. (Answer: A; Easy; LO1) 2. Which of the following activities would most likely be accounted for as a business-type activity? A. Fire protection. B. Recreation. C. Water operations. D. Street maintenance. (Answer: C; Moderate; LO1) 3. Prior to the creation of the Governmental Accounting Standards Board in 1984, which of the following organizations had the greatest influence over accounting concepts, principles, and standards for the state and local governments? A. The National Council on Governmental Accounting (NCGA) B. The National Association of College and University Business Officers (NACUBO). C. The American Institute of Certified Public Accountants (AICPA). D. The Comptroller General of the United States. (Answer: A; Moderate; LO1) 4. Which of the following is considered a health and welfare organization? A. Secondary schools. B. Young Men’s Christian Association (YMCA). C. Child protection agencies. D. United Way. (Answer: C; Easy; LO2) 5. Which of the...
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...CAFR BUDGET ANALYSIS 2 CAFR Budget Analysis The Governmental Accounting Standards Board (GASB) and the Financial Accounting Standards Board (FASB) serve similar functions for different accounting entities. The GASB maintains accountability over state and local governments, while the FASB maintains adherence to standards for not-for-profit entities. Both governments and not-for-profit organizations use an expenditure approach to accounting where budgetary needs are the first priority over financial statements. Governments however, have additional reporting items that fall within the purview of the power to summon resources. Governments and not-for-profit entities have a different business model than that of for-profit organizations, because governments and not-for-profit entities primary business goal is something other than profit. Governments differentiate themselves from not-for-profit entities by the ability to use taxes, licenses, and legislature as a means to levy revenue to pay for expenses. Not-for-profit organizations primarily use grants, investments, and contracts to earn revenue (Copley & Engstrom, 2007). Modified Accrual Method Since governments and not-for-profit organizations use a different business model than traditional businesses, a modified accrual method is used to account for assets, liabilities, and capital. The GASB and FASB allow for the creation of individual accounting entities called funds that track the funding and expenses for that entity. Each...
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...towns, and public schools that receive tax revenue to finance the services they provide. True False 3. The Governmental Accounting Standards Board (GASB) is the body authorized to establish accounting principles for all state and local governments, both general purpose and special purpose. True False 4. The Governmental Accounting Standards Board (GASB) is the body authorized to establish accounting principles for all government entities. True False 5. The Financial Accounting Standards Board (FASB) is the body authorized to establish accounting principles for all colleges and universities and health care entities. True False 6. Neither governmental nor not-for-profit entities have residual equity that can be distributed to owners. True False 7. A characteristic common to governmental and not-for-profit organizations is that they do not exist to provide goods or services at a profit or profit equivalent. True False 8. The needs of users of government financial reports are the same as those of users of business entity financial reports. True False 9. The Federal Accounting Standards Advisory Board (FASAB) recommends accounting principles and standards for the federal government and its agencies and departments. True False 10. The FASB, GASB, and FASAB identify primarily external users as the focus of their financial reports. True False 11. Interperiod equity refers to the concept that...
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...has created organizations that even monitor our own government. One organization is the Governmental Accounting Standards Board (GASB). This is “an authoritative accounting and financial reporting standard-setting body for government entities” (Granof 2002). Their main objective is to ensure that financial reporting needs are meeting for the financial users. This goal is very difficult to accommodate to all users. Therefore, GASB continues to create new standards for financial reporting for state and local governments. One of the recent major obstacles for GASB was to produce standards for full accrual basis accounting for all state, local, and not-for-profit entities. This would allow for cost/loss in an entity’s capital assets and infrastructure. This can be distributed over the useful years of life instead of the initial year. In using the cash method, the value of physical assets and the depreciation on infrastructures such as roads, bridges, sewers, and drainage systems is not shown on the books. On average, most infrastructures decline in usefulness or value over a period of 20 to 50 years. This new standard thus creates GASB Statement Number 34 (GASB 34). Fixed assets have been very troublesome for the governmental financial reporting. Over the years, many states and local governments have failed to keep records of any fixed assets. The GASB 34 requires reporting of all capital and infrastructure assets within three different phases. General Provisions are listed and...
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...Chapter 1 The Government and Not-For-Profit Environment ------------------------------------------------- Questions for Review and Discussion 1. The critical distinction between for-profit businesses and not-for-profits including governments is that businesses have profit as their main motive whereas the others have service. A primary purpose of financial reporting is to report on an entity’s accomplishments — how well it achieved its objectives. Accordingly, the financial statements of businesses measure profitability, their key objective. Financial reports of governments and other not-for-profits should not focus on profitability, since it is not a relevant objective. Ideally, therefore, they should focus on other performance objectives, such as how well the organizations met their service goals. In reality, however, the goal of reporting on how well they have achieved such goals has proven difficult to attain and the financial reports have focused mainly on financially-related data. 2. Governments and not-for-profits are “governed” by the budget, whereas businesses are governed by the marketplace. The budget is the key political and fiscal document of governments and not-for-profits. It determines how an entity obtains its resources and how it allocates them. It encapsulates most key decisions of consequence made by the organization. In a government the budget is not merely a managerial document; it is the law. 3. Owing to the significance of the budget...
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