Accounting Standards Essay

1364 Words6 Pages
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…show more content…
FASB applied to businesses has always served to provide a useful metric for the business to achieve its intended objective, maximization of profits. Performance and Accountability Reports, when properly applied, can provide this same service to federal organizations. At the same time, the federal governments actual implementation of performance standards and report consolidation standards may be one of its weaknesses. A potential difficulty with consolidation of the financial reports and performance metrics of several unique and distinct federal agencies may be an oversimplification of the big picture. This oversimplification can lead to a competition that shifts emphasis from big picture concerns to more trivial matters. This phenomenon can be viewed in the implementation of the "Executive Branch Management Scorecard" which compares specific areas of different federal organizations and assigns colors to them based on their ability to meet given performance standards. This has resulted in organizations applying their efforts to reach the "lowest hanging fruit" instead of focusing on their most pressing issues. It is crucial that the federal government maintain their focus on addressing major issues for FASAB to provide its intended purpose. State and Local Government Accounting In my opinion, the most significant strength of the Comprehensive Annual
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