Government and Non-Profit Accounting

The Governmental Accounting Standards Board (GASB) and The Financial Accounting Standards Board (FASB) provide the generally accepted accounting principles (GAAP) that are utilized by the state and the local governments. These organization are both private, no-for-profit and non-governmental institution.

They are both headed by the Accounting Foundation (FAF) and receive funds from the latter. The mission of the GASB and the FASB is to oversee to the establishment and improvement of standards of accounting and financial reporting so as to inform and educate the people, including the auditors, the issuers and those who may have use of these financial reports (Miller et al 1998).

Some aspects where the GASB and the FASB differs include the following: Contributed services wherein GASB has no statement regarding the matter while FASB has provided a criterion for recognizing and measuring contributed services; Restricted cash contributions wherein cash contributions are either temporarily or permanently restricted for the FASB while the GASB requires that recognition be deferred revenue if it will be restricted to a period in the future; Endowment pledges wherein these are viewed as permanently restricted net assets by the FASB while GASB does not recognize endowment pledges as the primary restriction is not satisfied until upon receipt of the funds; and Restricted non-endowment pledges wherein FASB see these as temporarily restricted revenue while GASB does not allow recognition if it is intended for certain resources that are not available for the current year (Wilson et al 1999).

In modified accrual basis of accounting, events and transaction are recognized at the moment that they occur regardless of the time the cash was remunerated or obtained. A difference between modified and full accrual is the time occurring involving the acquirement of assets and goods and how they are used.

References: Codification of Governmental Accounting and Financial Reporting Standards as of June 30,1998. (1998). Norwalk, CT: Governmental Accounting Standards Board. Miller, Paul B. W. , Redding, Rodney J. , and Bahnson, Paul R. (1998). The FASB—The People, the Process, and the Politics. New York: Irwin/McGraw-Hill. Wilson, Earl R. , Hay, Leon E. , and Kattelus, Susan C. (1999). Accounting for Governmental and Nonprofit Entities. New York: Irwin/McGraw-Hill.