Lesson 72 - Advanced Accounting Course

Lesson 72: GASB Standards and Their Application in Government Entities

💡 What is GASB?

GASB stands for Governmental Accounting Standards Board.
It creates accounting rules (standards) for U.S. state and local governments to ensure transparency, consistency, and accountability in public financial reporting. 🏛️💼

🧠 Think of GASB as the GAAP for government entities.

🧭 Why Is GASB Important?

Governments handle public funds, so it’s crucial to:

• 📖 Show how money is spent
  
  

• 💬 Inform the public and stakeholders
  
  

• ✅ Ensure accountability and proper management
  
  

GASB standards help governments earn trust by making their finances clear and comparable.

🔍 Who Must Follow GASB?

The following entities must use GASB standards:

• 🏙️ Cities and municipalities
  
  

• 🏫 Public schools and universities
  
  

• 🏥 Public hospitals
  
  

• 🚓 Police and fire departments
  
  

• 🚧 State-run infrastructure agencies
  
  

❗ Federal entities do NOT follow GASB — they use FASAB (Federal Accounting Standards Advisory Board)

🧾 Core GASB Standards

📊 GASB vs. FASB (Quick Comparison) 

📄 Financial Reports Required Under GASB

1. Government-Wide Financial Statements
   
   

   • Statement of Net Position
     
     

   • Statement of Activities
     (Accrual basis – like private sector)
     
     

2. Fund Financial Statements
   
   

   • For each fund (general, capital projects, special revenue, etc.)
     (Modified accrual basis)
     
     

3. Notes to Financial Statements
   
   

   • Detailed explanations for clarity
     
     

4. Required Supplementary Information (RSI)
   
   

   • Budget-to-actual comparisons
     
     

   • Pension plan funding status
     
     

✅ Summary

• GASB sets the rules for government accounting in the U.S.
  
  

• It ensures transparency, accountability, and trust
  
  

• GASB uses a mix of accrual and modified accrual accounting
  
  

• Key differences from corporate accounting focus on funds, public responsibility, and long-term obligations