Federal Accounting Standards Advisory Board - Needed Now More Than Ever

By Tierney, Cornelius E. | The Government Accountants Journal, Fall 1992 | Go to article overview

Federal Accounting Standards Advisory Board - Needed Now More Than Ever


Tierney, Cornelius E., The Government Accountants Journal


No federal appropriation; no authorizing legislation; no recognition by a law of Congress; no presidential executive order proclaiming its existence; no authority to prescribe rules and regulations; not an official federal entity.

Can the Federal Accounting Standards Advisory Board possibly work under these conditions? Why not?

Established in October 1990, the Federal Accounting Standards Advisory Board (FASAB) is the creation of the Comptroller General the Director of the Office of Management and Budget and the Secretary of Treasury. The Board exists through a memorandum of understanding between these three principal executives of the federal government and has the mission:

"...to recommend accounting standards to the JFMIP principals after considering the financial and budgetary needs of congressional oversight groups, executive agencies and the needs of other users of financial information."(1)

The founding memorandum mentions the three principals, who also established the Joint Financial Management Improvement Program. The JFMIP conducts a continuous program to improve federal accounting and financial reporting, but, JFMIP does have standing in a presidential executive order and has been recognized in legislation since its formation.

FASAB--WHY NOW?

With such an inauspicious, almost orphaned, beginning, one might well inquire about the basis for the optimistic and unqualified certainty that the Board will succeed and accomplish its mission better than a more formally chartered. better staffed, and heavily financed federal agency.

I think the answer is more related to the economic turbulence of the times rather than the fact that the federal government needs and should have accounting standards that are consistently applied and other uniformly compiled financial information. No person, no entity, nor even the federal government could continue much longer with its fiscal profligacy and with the systems it has.

During the past 200 years, some presidents recommended and some Congresses passed legislation to better manage and more accurately account for federal finances. Two laws--the Budget and Accounting Act of 1921, and the Budget and Accounting Procedures Act of 1950 (that modified parts of the 1921 Act)--are generally viewed as the most significant and far reaching. But as the years showed, little money, few personnel and almost no capital funds were authorized or appropriated by Congress to implement this legislation. Further, reports by many, in and out of the federal government, of noncompliance with the essential sections of these acts dealing with accounting, systems, reporting and auditing went unheeded and were generally ignored by both the executive and legislative branches.

While no date dominates, I believe the federal government began to get wake-up calls and many sensed that all was not well by the late 1980s. My personal fix is September 30, 1987, the close of the fiscal year.

Then Congress and the President reported a budget deficit of $148 billion--a figure that was immediately challenged by financial media and the general press as being too low by several billion dollars. Such year-end fudging of the numbers, by the federal elected leadership was not new; in years past this fiscal legerdemain was even encouraged as "creative" financial management. What was new was the critical attention this year's announcement drew. Congress, the White House, Treasury Department and OMB were directly challenged on the veracity of this deficit balance from all quarters. Financial news analysts declared the understated deficit resulted from deliberate modifications in reporting the federal government's true revenues and expenditures.

The GAO reported that nongovernmental funds deducted from federal employees' paychecks had been treated as federal receipts. Also, 1987 expenditures had been delayed and rolled forward into 1988. The press reported that the real deficit was at least $190 billion and that the published deficit of only $148 billion was attributable to "one-year-only money" and "fake accounting. …

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