Accounting and Financial Reporting

Five-Year Review of the GASB

The Government Finance Officers Association (GFOA) has long supported the establishment and ongoing operations of the Governmental Accounting Standards Board (GASB). The Financial Accounting Foundation (FAF) and the Governmental Accounting Standards Advisory Council (GASAC) recently conducted a five-year review of the GASB's activities as prescribed by the 1984 Structural Agreement. This review resulted in 35 recommendations concerning the GASB's structure and procedures.

The GFOA emphatically supports the continuance of a separate standard-setting body for governments. In connection with the five-year review, the GFOA supports the following positions:

  1. The GASAC should continue to participate with the FAF in the approval of GASB members.
  2. The current jurisdiction of the GASB should not be reduced. The GFOA will not accept a standard-setting body for governments which does not exercise full and exclusive jurisdiction over all government entities. Accordingly, were the FAF to remove certain government entities from the GASB's jurisdiction, the GFOA would have no option but to provide its membership with an alternative standard-setting mechanism that they would find acceptable.
  3. The FAF should establish a special committee, composed of an equal number of governmental and private-sector trustees, to determine the jurisdiction of the GASB and the FASB in specific situations. The definition of "governmental" to be used in such determinations should be set by the GASB alone, subject to FAF approval.
  4. The state and local government representation on the FAF should be increased from three members to five members. In addition, individuals from government and identified users of the financial statements of government entities should be given consideration in the trustees' appointments to at-large seats.
  5. All members of the GASB should serve full-time. However, adequate funding sources should be in place before a full-time board is established.

  • Publication date: June 1989