Government Accounting Standards Board (GASB)

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Governmental Accounting Standards Board (GASB)

The Governmental Accounting Standards Board (GASB) is an independent, private organization that establishes accounting and financial reporting standards—generally accepted accounting principles (GAAP)—for U.S. state and local governments. Its standards promote clear, consistent, transparent, and comparable financial information used by taxpayers, bondholders, legislators, and oversight bodies to evaluate government finances and shape public policy.

Mission

GASB’s mission is to develop and improve accounting and reporting standards that provide useful information to investors and other users of government financial reports, and to help stakeholders understand and implement those standards.

What GASB Does

  • Issues GAAP specifically tailored to the unique needs of state and local governments.
  • Develops standards through a public, open process that invites comment from a broad range of stakeholders.
  • Produces guidance, implementation material, and educational resources to help governments apply standards consistently.

Standard‑Setting Process

  • Proposals and research are exposed for public comment through Invitations to Comment and exposure drafts.
  • Consultative groups and technical task forces—composed of practitioners, academics, and users—conduct research and advise the board on agenda items and technical projects.
  • The board considers public feedback and consultative input before finalizing standards.

Governance and Oversight

  • A seven‑member board governs GASB, with members appointed by the Financial Accounting Foundation (FAF) Board of Trustees for multi‑year terms. The board typically includes a full‑time chair and part‑time vice‑chair and members, bringing expertise in governmental accounting and finance.
  • GASB is overseen by the FAF, which also oversees the Financial Accounting Standards Board (FASB), the standard‑setter for private‑sector accounting.
  • Funding comes primarily from accounting support fees paid by brokers and dealers who trade municipal bonds—a mechanism established to support independent standard‑setting for government accounting.

Role of GAAP in Governmental Accounting

GAAP provides a consistent framework for recording and reporting financial information, increasing transparency and comparability across governments. Clear standards help users assess fiscal health, accountability, and performance, which supports better decision‑making and investor confidence.

Municipal Bonds — Why They Matter

Municipal bonds are debt securities issued by state and local governments to finance projects and operations. Because many governments follow GASB’s GAAP when preparing financial statements, investors and other users rely on GASB standards to evaluate the creditworthiness and financial position of issuers.

Who Uses GASB Standards

  • Taxpayers and citizens monitoring public finances
  • Investors and bond analysts assessing credit risk
  • Government officials and legislators making budgetary and policy decisions
  • Auditors and financial managers preparing and reviewing government financial statements

Key Takeaways

  • GASB sets GAAP for state and local governments to ensure transparent, comparable financial reporting.
  • It follows an open, consultative process that incorporates public feedback and expert input.
  • Oversight by the FAF and funding tied to municipal bond market participants support GASB’s independent standard‑setting role.
  • GASB standards strengthen trust in government financial reports, aiding investors, policymakers, and the public.