Essay on Accounting Standards

Essay on Accounting Standards

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The Federal Government, State and Local Governments (SLG), and Not-for-profit organizations (NFP) all have unique objectives and assets under their control. As a result it may not be feasible to develop a single set of accounting standards that accurately represents all of their financial activity in a manner that is useful to concerned parties. To resolve these discrepancies three separate standard setting bodies have been tasked with developing Generally Accepted Accounting Principles (GAAP) for these different organizations: The Federal Accounting Standards Advisory Board (FASAB) for federal accounting, the Governmental Accounting Standards Board (GASB) for SLG, and the Financial Accounting Standards Board (FASB) for NFPs. The different standards created by these organizations all achieve their goals with varying strengths and weaknesses.

Federal Government Accounting
FASAB faces many unique challenges when developing accounting standards for the federal government. The federal government's shear size, ability to manipulate the money supply, and complex issues such as accounting for social security all complicate the task of developing a single standard for representing the government's financial activity. In spite of these obstacles FASAB has managed to provide a standard requiring all agencies to provide similar reports, which can is then consolidated into an individual report. This allows the reader to analyze the whole as well as the contributions of the individual parts.

The greatest strength of FASAB, in my opinion, is its use of performance and accountability reports. These reports require federal organizations to provide logical outcome based metrics that measure the entities ability to achieve its desired effec...


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... no requirement for the Form-990 to be posted to an organizations website. To find an organizations Form-990 an interested party must search online for the tax form, which can be difficult if they do not know the organizations proper legal name or what address they claim for tax purposes.

Conclusion
The task of representing the financial activities and effectiveness of federal, SLG, and NFP can be complex given the distinct goals and resources of these entities. The capitalist nature of our society has historically placed greater emphasis on the accounting standards of businesses than those of the government and NFP organizations. As more attention begins to shift in our society on the ethics associated with accounting standards it is essential that we ensure that the organizations which set this policy and work toward social change be held to the same standard.

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