What is GASB 34? Guide to GASB 34 Compliance | UpKeep
Answered July 28 2019
GASB 34 is a set of accounting standards established by the Government Accounting Standards Board which requires government entities to report the value of their capital assets on their financial statements. The Governmental Accounting Standards Board (GASB) oversees and works to improve government-related accounting and financial reporting.
History of GASB 34
GASB Statement No. 34 was created in June 1999, and its standards are currently voluntary. However, some states and municipalities may integrate GASB standards into state or local laws.
Purpose of GASB 34
GASB standards have been revised in order to make governmental financial reports easier to read as well as ensure that the data provided in the reports were useful to all those using them.
Visualize financial viability
For government organizations, GASB 34 standards should provide a clearer picture of the organization’s financial viability,
Predict financial accounting requirements
GASB 34 helps to predict future financial reporting requirements.
Improve the quality of services delivered to the public
GASB 34 standards ensure the transparency of all spending by states, cities, towns, villages, school districts, and public utilities. Thus, increased public insight democratizes governmental financial activities.
GASB 34 Requirements
GASB 34 lays out the financial statements that government entities should provide for review. This includes required supplementary information, including budgetary comparison schedules, as well as financial data for enterprise and internal service funds.
Accrual based accounting system
GASB 34 sets forth several requirements including an accrual-based accounting system where expenses and revenues are recorded on basic financial statements in the same fiscal year they occur.
Asset management and reporting
Organizations also need to report the value of infrastructure assets and deferred maintenance costs, which can be easily tracked in a CMMS system. Although this data is valuable for transparency to taxpayers, this reporting model is also critical in helping any organization gauge ongoing maintenance requirements.
By understanding the complete costs associated with deferring maintenance, government officials may be able to make a better case for raising governmental funds to invest in preventive or predictive maintenance activities.
Governmental funds are reported as income
Finally, GASB 24 requires that things like federal grants are recorded as income. Although all governmental accounting requires reporting of income, including contributed capital will make it more challenging for government organizations to increase rates or tax contributions.
Reasons to Adhere to GASB 34 Standards
Adhering to GASB 34 reporting standards also helps organizations earn a good credit rating, which can assist leadership in obtaining loans, low interest rates, needed bonds, or other sources of financial support.
What does GASB stand for?
Governmental Accounting Standards Board (GASB)
Who uses GASB 34 ?
Government officials within states, cities, towns, villages, school districts, and public utilities use GASB 34.
Why is GASB 34 important?
The goal of GASB 34 was to improve financial transparency within state and local governments fiscal reports. The GASB 34 increases governmental accountability by allowing citizens to participate in deciding operating budgets of state and local governments.
What is the difference between GASB and FASB?
Whereas the GASB focuses on the government and its agencies, the FASB includes public companies in the United States. The FASB establishes financial accounting and reporting standards for public and private companies and not-for-profit organizations that follow Generally Accepted Accounting Principles (GAAP). Both the GASB and FASB increase public transparency into the financial statements of trusted institutions, however, they differ in their scope.