Academic journal article Journal of Accountancy

AICPA Recognizes FASAB as GAAP Standard Setter

Academic journal article Journal of Accountancy

AICPA Recognizes FASAB as GAAP Standard Setter

Article excerpt

The AICPA governing council last fall formally named the Federal Accounting Standards Advisory Board the accounting standard setter for the federal government. Amid controversy over its action, the council elevated FASAB to the level of FASB and GASB, which set standards for nongovernment entities and for state and local governments, respectively.

Future FASAB statements of federal financial accounting standards, as well as those it issued since March 1993, now have the authority of GAAR Formerly, FASAB's guidance was considered to be an "other comprehensive basis of accounting" (OCBOA), which is not as widely recognized in the United States as GAAP. The secretary of the Treasury, the director of the Office of Management and Budget (OMB) and the comptroller general established FASAB in 1990.

The AICPA said FASAB's new authority means that, for the first time, the federal government will be able to report its financial position according to accounting standards widely recognized by CPAs.

Supporters of the council's action believe this advantage outweighs any misgivings voiced by critics. "This is another marker in the progress of the federal government toward improving its financial management and accountability," said Robert K. Elliott, chairman of the AICPA board of directors.

Four pieces of legislation provided the impetus for stronger federal financial management: the Chief Financial Officers Act of 1990, the Government Performance and Results Act of 1993, the Government Management Reform Act of 1994 and the Federal Financial Management Improvement Act of 1996. In particular, these laws mandated annual independent audits of federal government agencies' financial statements.

The council's decision worried some observers. …

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