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Reporting Requirements for Annual Financial Reports of State Agencies and Universities

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Reporting Requirements for Annual Financial Reports of State Agencies and Universities

Introduction

Governmental Accounting Standards Board (GASB)

The Governmental Accounting Standards Board (GASB) is a component of the Financial Accounting Foundation (FAF) — a private sector, non-profit organization. GASB is not a governmental entity. GASB receives funding from an accounting support fee established under the Dodd-Frank Wall Street Reform and Consumer Protection Act. GASB provides authoritative guidance on accounting and financial reporting for state and local governments. GASB establishes generally accepted accounting principles (GAAP) for state and local governments but has no enforcement authority. However, some states (including Texas) enact laws requiring compliance with GASB standards, such as: Texas Government Code. Section 321.013(b) and Texas Government Code, Section 403.013(c).

GASB statements and interpretations are the highest level of authority under GASB’s GAAP hierarchy as established by GASB Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments, which is effective for fiscal 2016. GAAP-compliant accounting for GASB is divided into two categories:

  • Category A — all GASB statements and interpretations
  • Category B — all technical bulletins, implementation guides and other literature of the American Institute of Certified Public Accountants (AICPA) that are cleared by GASB

Category A is the most authoritative in the established hierarchy. Most applicable transactions for an agency’s AFR fall into Category A. If an accounting transaction is not specified by a pronouncement in Category A, the agency should consider whether the accounting treatment is specified by a source in Category B.

If the accounting treatment is not specified within either category and there are no accounting principles for similar transactions within a source of authoritative GAAP, the agency may then consider nonauthoritative accounting literature. Some sources of nonauthoritative accounting literature include:

  • GASB concepts statements
  • Financial Accounting Standards Board pronouncements and other literature
  • Federal Accounting Standards Advisory Board
  • International Public Sector Accounting Standards Board
  • International Accounting Standards Board
  • AICPA literature not cleared by GASB

For a list of the current GASB pronouncements and guidance documents, click on Current GASB Pronouncements or GASB Implementation Guides found in the left navigation. For a list of current statements that have been issued but are not effective until future fiscal years, click on Upcoming GASB Statements.