The Governmental Accounting Standards Board (GASB) is an authoritative organization responsible for establishing and improving accounting and financial reporting standards for state and local governments in the United States. Designed to ensure transparency and enhance decision-making in governmental financial reporting, the GASB operates under the auspices of the Financial Accounting Foundation (FAF).
With a primary objective of providing guidance that promotes accurate and reliable financial reporting, the GASB establishes standards that are recognized as the authoritative source for governmental accounting and financial reporting, similar to Generally Accepted Accounting Principles (GAAP) in the private sector.
The GASB sets forth standards that govern various aspects of state and local government financial reporting, including measurement, presentation, and disclosure of financial information. These standards cover a wide range of topics such as revenue recognition, expenditure classification, accounting for investments, pensions, leases, and long-term debt, among others.
By establishing consistent and transparent accounting standards, the GASB enables users of financial statements – such as citizens, investors, and creditors – to understand and assess the financial position, performance, and accountability of state and local governments. The adoption of GASB standards also facilitates comparability between governmental entities, aiding in benchmarking, best practices, and decision-making at both the entity and aggregate levels.
