Do you think it is necessary to have two different regulatory boards, FASB and GASB, for accounting and financial reporting? Why?
What would the benefits be of having one regulatory board and do you think the benefits outweigh the drawbacks?© BrainMass Inc. brainmass.com March 4, 2021, 7:16 pm ad1c9bdddf
1. Do you think it is necessary to have two different regulatory boards, FASB and GASB, for accounting and financial reporting? Why?
Because they play different roles and regulate different groups, there seems to be a need for both regulatory boards, at least in their present form.
For example, the Governmental Accounting Standards Board (GASB) is currently the source of generally accepted accounting principles (GAAP) used by State and Local governments in the United States of America. As with most of the entities involved in creating GAAP in the United States, it is a private, non-governmental organization. The mission of the Governmental Accounting Standards Board is to establish and improve standards of state and local governmental accounting and financial reporting that will result in useful information for users of financial reports and guide and educate the public, including issuers, auditors, and users of those financial reports. The GASB has issued Statements, Interpretations, Technical Bulletins, and Concept Statements defining GAAP for state and local governments since 1984. GAAP for the Federal government is defined by the Federal Accounting Standards Advisory Board.
In contrast, the Financial Accounting Standards Board (FASB) is a major organization whose primary purpose is to develop Generally Accepted Accounting Principles in the United States (US GAAP), similar to what the Governmental Accounting Standards Board(GASB) does for local and state governments in the United States. Thus, both regulatory boards are needed because they serve different target groups. As well, the FASB is part of a structure that is independent of all other business and professional organizations. Before the present structure was created, financial accounting and reporting standards were established first by the Committee on Accounting Procedure of the American Institute of Certified Public Accountants (1936-1959) and then by the Accounting Principles Board, also a part of the AICPA (1959-73). Pronouncements of those predecessor bodies remain in force unless amended or superseded by the FASB.
The FASB is in the middle of a convergence project with the International Accounting Standards Board to make it easier for companies to report financial statements, so that separate financial statements are not needed for US and international markets. As part of the convergence project, the FASB has started transitioning from the principle of historical cost to fair value, something the IASB believes in dearly. http://en.wikipedia.org/wiki/FASB. FASB Interpretations are published by the Financial Accounting Standards Board (FASB). They extend or explain existing standards (primarily published in Statements of Financial Accounting Standards). Interpretations are a part of the U.S. Generally accepted accounting principles (US GAAP). 47 interpretations have been published as of July 2005. http://en.wikipedia.org/wiki/List_of_FASB_Interpretations
2. What would the benefits be of having one regulatory board and do you think the benefits outweigh the drawbacks?
The major benefit would perhaps be that it would localize all regulations under the regulatory body. However, with the GASB's focus of the state and local governments GAAP and the FASB's on the US GAAP, perhaps the major drawback would be one of confusion due to the many different hats necessary to ...
This solution examines if it is necessary to have two different regulatory boards, FASB and GASB, for accounting and financial reporting, and why. It also discusses the benefits be of having one regulatory board and if the benefits outweigh the drawbacks. References are provided.