In this paper I will describe the different between GASB and FASB and their objectives of the two standards. I will also provide how to modified accrual basis of accounting in which they differs from full accrual accounting. The GASB sets generally accepted accounting standards for the government except the federal government and non-profit organizations while the FASB is for private and public organizations. The objective of GASB is to create and set accounting standards that would ensure that financial statements would be accurate for creditors, investors and to the public.
The GASB really do not have the power to enforce compliance with the standards but the authorities for its standard are recognized under the code of professional conduct of the AICPA. Most financial statements accounting for government and non-profit organizations are fund base, which actually shows how their organization money is used instead of how much revenue they earned in the cycle.
The objective for the FASB was created to aid improve standards of financial accounting and reporting the way financial reporting by nongovernmental, that provides information in which is use to make decision regarding data that is use by investors, creditors, auditors of financial reports. In simpler terms the FASB is a set of standards that would record and present financial transactions in which the businesses must have to present how they will earn revenue instead of how much revenue they have spent for the cycle period.
The accrual accounting will record all revenues and expenditures and there is no set rule of when cash is pertain to the translations and received or paid whether used by private corporation or public corporation in modified accrual accounting revenues that are available by measurable and expenditures when there are liability related to incurred and used by government organization in the accounting for their transactions. But exception to the rule there is no deferral of cost that will be done in the future period cycles. All physical assets that will be services in the future must be written off or expense with in the period the service occurs.
In conclusion, the GASB and the FASB are great standards to use when operating organization whether is private organization or a public organization. Both have a set of rule and regulations that improve the way financial report should be created, prepared and reduced the risk of fraud
Granof, M.H. & Khumanwala, S.B. (2011). Government and not-for-profit accounting: Concepts & practices. (5thed.)) Hoboken, NJ: John Wiley & Son Copley, P.A., & Engstrom, J.H. (2007). Essentials of accounting for governmental and not-for-profit organizations (8th ed.). Boston, MA: McGraw-Hill/Irwin.