Page 378 - Encyclopedia of Business and Finance

eobf_G 7/5/06 3:03 PM Page 355

Governmental Accounting Standards Board

SEE ALSO Antitrust Legistlation; Deregulation; Environ- 1. Issue standards that improve the usefulness of finan-
mental Protection Agency; Occupational Safety and cial reports based on (a) the needs of financial report
Health Administration (OSHA); Securities and users, (b) the primary characteristics of understand-
Exchange Commission ability, relevance, and reliability, and (c) the qualities
of comparability and consistency

BIBLIOGRAPHY 2. Keep standards current to reflect changes in the gov-
Anticybersquatting Consumer Protection Act. ernmental environment
http://www.gigalaw.com/library/anticybersquattingact-1999- 3. Provide guidance on implementation of standards
11-29-p1.html
4. Consider significant areas of accounting and finan-
Boone, L. E., and Kurtz, D. L. (2002). Contemporary business
(10th ed.). New York: Harcourt College. cial reporting that can be improved through the
standard-setting process
Boone, L. E., and Kurtz, D. L. (2004). Contemporary marketing
(11th ed.). Mason, OH: Thomson South-Western. 5. Improve the common understanding of the nature
Churchill, G., and Peter, J. P. (1998). Marketing: Creating value and purposes of information contained in financial
for customers (2nd ed.). Boston: Irwin/McGraw Hill. reports
Dickson, P. R. (1998). Marketing management (2nd ed.). New
York: Dryden Press/Harcourt Brace College. GASB formulates and uses concepts to guide them in
the development of their standards. These concepts pro-
Kotler, P., and Armstrong, G. (2006). Principles of marketing
vide a frame of reference for resolving accounting and
(11th ed.). Upper Saddle River, NJ: Pearson Prentice-Hall.
financial reporting issues. This framework helps to estab-
McConnell, C. R., and Brue, S. L. (2002). Economics: Principles,
problems, and policies (15th ed.). New York: McGraw- lish reasonable bounds for judgment in preparing and
Hill/Irwin. using financial reports; it also helps the public understand
the nature and limitations of financial reporting. GASB
actively solicits and considers the views of its various con-
Allen D. Truell stituencies on all accounting and financial reporting
Michael Milbier
issues. GASB’s activities are open to public participation
and observation under due process procedures. These pro-
cedures are designed to permit timely, thorough, and open
study of accounting and financial reporting issues. Conse-
GOVERNMENTAL quently, broad public participation is encouraged in the
ACCOUNTING accounting standard-setting process, which permits com-
munication of all points of view and expressions of opin-
STANDARDS BOARD
ion at all stages of the process. Use of these procedures
The Governmental Accounting Standards Board (GASB) recognizes that general acceptance of the GASB conclu-
was organized in 1984 under the auspices of the Financial sions is enhanced by demonstrating that the comments
Accounting Foundation to establish financial accounting received during due process are considered carefully.
and reporting standards for state and local government
entities. These standards are important because external
GUIDING PRINCIPLES
financial reporting can demonstrate financial accountabil-
In establishing concepts and standards, the GASB exer-
ity to the public. They are the basis for many legislative
cises its judgment after research, due process, and careful
and regulatory decisions, as well as investment and credit
deliberation. Some of the principles used by GASB are:
policies. The foundation is responsible for selecting the
seven members of GASB and its Advisory Council, fund- 1. To be objective and neutral in its decision making.
ing their activities, and exercising general oversight. This principle ensures, as much as possible, that the
Except for the chairperson of GASB, all members are part information resulting from its standards is a faithful
time. representation of the effects of state and local gov-
GASB’s mission is to establish and improve stan- ernment activities. Objective and neutral means
dards of state and local governmental accounting and freedom from bias, precluding GASB from placing
financial reporting that will (1) result in useful informa- any particular interest above the interests of the
tion for users of financial reports and (2) guide and edu- many who rely on the information contained in
cate the public, including issuers, auditors, and users of financial reports.
those financial reports. To accomplish its mission, GASB 2. To weigh carefully the views of its constituents in
acts to: developing concepts and standards. This permits

ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION 355