Understanding GASB and FASB

The Governmental Accounting Standards Board (“GASB”) and the Financial Accounting Standards Board (“FASB”) release pronouncements/standards at least once every year that can affect our everyday professional lives. GASB pronouncements are applicable to governmental entities and FASB standards are applicable to public and private companies and not-for-profit organizations.

According to their website, “the collective mission of the GASB, [and] the FASB…is to establish and improve financial accounting and reporting standards to provide useful information to investors and other users of financial reports and educate stakeholders on how to most effectively understand and implement those standards.”  Both entities are recognized as authoritative by the American Institute of CPAs (“AICPA”) and establish accounting and reporting standards for entities that are in keeping with Generally Accepted Accounting Principles (“GAAP”).

For the upcoming fiscal year end of December 31, 2023 the following GASB pronouncements are required to be implemented by entities that are subject to GASB:

• 94-Public-Private and Public-Public Partnerships and Availability Payment Arrangements
• 96-Subscription-Based Information Technology Arrangements
  • The requirements related to leases, PPPs, and SBITAs are effective for fiscal years beginning after June 15, 2022, and all reporting periods thereafter
    • Fiscal years ending: June 2023, September 2023, December 2023, March 2024
  • The requirements related to financial guarantees and the classification and reporting of derivative instruments within the scope of Statement 53 are effective for fiscal years beginning after June 15, 2023, and all reporting periods thereafter.
    • Fiscal years ending: June 2024, September 2024, December 2024, March 2025
      • Earlier application is encouraged and is permitted by topic

Now that you have the information, what do you do with it?  Some pronouncements/standards may not be applicable to your organization’s current situations or needs, but you are still required to be aware of them and are subject to their requirements once they are implemented.  FASB offers additional resources, providing implementation guidance and any tools they have available (FASB).  GASB offers multiple Implementation Guides as well which may be helpful (GASB).

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Disclaimer: The information contained within this newsletter is provided for informational purposes only. All legal requirements and compliance matters should be reviewed with your legal counsel. RHR Smith and Company does not provide legal advice to clients.

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