 Hello and welcome to this session in which we would look at the accounting standard setting bodies for governmental and not-for-profit accounting. This topic is covered in your governmental and not-for-profit accounting, graduate or undergraduate course as well as the CPA exam. What makes this topic a little bit complicated is the fact that we have in the US three levels of government federal state and local. In addition to that we have not-for-profit which is not the government which is not for profit but under not-for-profit organization not-for-profits could be public which is governmental or it could be private. So notice we have five different units or five different categories of units that we need to understand which accounting standard regulate which body. Now before we start if you are a CPA candidate or a governmental accounting students I strongly suggest you visit my website farhatlectures.com especially if you are a CPA candidate. I don't replace your CPA review course please keep it I don't replace it this is not what I do I can do that. I can be useful addition to your CPA review course. I can be that vitamin pill that's going to add 10 to 15 points to your CPA exam score and I'm going to tell you from experience if you are studying for your CPA my CPA review course have had helped hundreds of thousands of students passing far because I understand I'm not I understand I explain governmental accounting way differently than any other CPA review course try me for a month that's your risk if you don't like it cancel your potential is passing the exam if not for anything take a look at my website to find out how well or not well your university doing on the CPA exam I do have resources and lectures for other accounting governmental audit tax courses as well please connect with me on LinkedIn if you haven't done so and take a look at my LinkedIn recommendation like this recording share it connect with me on Instagram and Facebook so let's go ahead and get start with this accounting setting standard bodies I'm going to start with the federal government okay so who sets the accounting standard for the federal government well accounting and financial reporting standard is published by the federal accounting standard advisory board or FAS AB so this is the organization or the or the board that sets the accounting standard for the governmental for the federal government okay the standards are technically recommendations so those are recommendation because the US is obviously a sovereign nation and it cannot give that regulation to an independent party so this board gives recommendation and guess what those recommendation becomes standards or principle as long as no one object to them and who's gonna not object to them three parties the US government accountability office if they don't say anything they accept it the US department of treasury and the US office of management and budget so when in the controller general when these parties they don't object to what FAS AB is stating it becomes basically effective okay that's how it works now FAS AB applies to financial report once again issued by federal agencies and to the consolidated financial report of the United States government now this topic is not really covered on the CPA exam and most governmental and not-for-profit accounting most they don't cover this topic altogether I may create a chapter about this but it's not really covered because it covers the federal government now let's move so we talked about the federal government let's move to the state and local accounting for financial reporting for state and local now we're done with this we're done with the federal is said by GASB the governmental accounting standard board and here's GASB so GASB is basically the equivalent of FAA FAS AB this is GASB it governed state not-for-profit organization as well as government not-for- profit organization remember we have not-for-profit organization that are owned in quote by the government that are controlled by the government so GASB also set the accounting standard for those not-for-profit organization like what college and universities for example I teach at a public university called West Chester University basically that's a public university I also teach at the community college of Philadelphia I teach at Northampton community college those are colleges and universities that are that are under the government okay healthcare entities well you could see a hospital that's a government government run hospital like a county hospital museums libraries performing arts organization that are owned or controlled by the government now the same thing you could see college and universities that are privately owned right healthcare entities of course hospitals that are run by a private company museums libraries same thing so notice those are run by the fed by local and state government so FASB applies to those FASB applies to those so accounting and financial reporting standard for profit seeking businesses and non-governmental and not-for-profit organization are controlled by FASB so notice we have the same thing as you know colleges and universities for example I teach also at the sales university that's a private Catholic university it's a private so they follow FASB they don't follow GASB okay well not not not not the sales university let's assume which I would never do that teach for Strayer University or the Vry which I will never do that even if I was offered the job then they are ruled under FASB because those are for-profit proprietary schools but notice not for profit or those not for-profit organization follow FASB and I hope and I hope you know what FASB is so FASB deals with businesses for-profit organization and non-governmental not for-profit organization notice here they are non-governmental if they are governmental they will go under GASB so in the multiple choice questions you have to look at the hospital is it the county hospital or is it a private is it private hospital it makes a difference now both of these organizations FASB and GASB they they're basically brother and sister and the father is and the parents is the financial accounting foundation so FASB and GASB are parallel bodies under the oversight of the financial accounting foundation FAF FAF appoints the members of the two boards and provide financial support to the board by obtaining contribution from businesses so who financed this whole process professional organization of accounting financial analysts CPA firms that rating agencies state and local government so people give money to this organization to this organization that the foundation the foundation set up the boards for both of them and that's why they are considered independent standard setting bodies so not one party financed them they are financed by different individual and they help set the accounting standard now bear in mind that FASB FASB GASB and FAS FASAB they're all part of GAP once again we don't worry too much about the federal government I don't know why no one teaches the federal government because unless you work for the federal government no one's gonna care about this so they are all they are all part of GAP generally except the accounting principle now GASB authoritative sources or authority sources you know GASB are set in documents that are called statement of financial accounting standard or as FAS as FAS they used to have what's called interpretation provided that provided guidance for each statement but they no longer issue interpretation now what they issue instead are technical bulletin and implementation guides okay from time to time they do that so interpretation that's gone okay so the sources of authoritative GAP for state and local government are therefore under two categories A is GASB statements and the old interpretation if they still exist category B is GASB implementation guides GASB technical bulletin literature of the American AI the American Institute of the AIC of certified public accountant that are specifically cleared by GASB so the first thing you do is you look at category A please have an answer in GASB if you do you go with that answer if not you look at category B if you don't have specified instruction either from either sources category A or B the government would look at transaction that are similar in nature to determine how should they book that transaction how should they book that transaction if not if there's no similar transaction the government would use non-authoritative sources for guidance then that will be GASB concept statement FASB GASB or international state board pronouncements AI CPA literature not cleared by GASB other sources provided by professional organization laboratory agencies textbook and published articles or any practices that that's acceptable among governmental unit without any specific authoritative action which is also kind of generally accepted so this is the author these are non-authoritative sources and these are the authoritative sources so this is basically all what you need to know about FASB GASB and FASAB at the end of this recording i'm going to invite you again to check out my website farhat-lectures.com whether you are an accounting student or especially a CPA candidate i do help people i do help students CPA succeed in their governmental accounting course this is what i do in my governmental accounting course i'm gonna say you usually you should not talk about yourself is the best on the net it's the best on the net it's the best on the worldwide web check it out take a look at it i help many students i can help you good luck study hard and most importantly stay safe