The Federal Accounting Standards Advisory Board (FASAB) issues federal financial accounting standards and also provides advisory services. This is done after considering the needs of external and internal user for financial information ( Mission, 2019 ). The Board states in its mission that it helps the government to stay financially and publicly accountable by issuing financial reports, which include financial statements conforming to general accounting principles. These reports help while assessing the governments accountability and efficiency while also showing the economic and social consequences of allocating federal resources to various sectors.
The FASAB is made of nine members. Three of these represent the board’s sponsors (principals) and they come from the Government Accountability Office (GAO), the Department of Treasury, the Congressional Budget Office (CBO) and the Office of Management and Budget (OMB). Additional two federal members are selected by the sponsors. Aside from these, other nonfederal members are selected, individuals who are cognizant with financial procedures, range from accounting and auditing or even scholars. These members are also appointed by the sponsors. The chair of the board is also appointed by the sponsors and is a nonfederal member. The FASAB is funded by its sponsors; the GAO, the Treasury Department, and the OMB.
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It could be argued that the FASAB does not have an independent appearance. This is due to the sources of funding for the body or the fact that these sources also select the board’s members. The fact that the decisions that the board makes affect the sponsors and that the sponsors are in a position to sway the directions of the standards issued also contribute towards this perception. It could be argued that the credibility of the board is improved by the nonfederal members or the fact that the board needs two thirds of its members to approve a standard. However, they would need all the nonfederal members to be in unison to realize this. Additionally, the principals have veto power over the statements passed by the body if they act within the 90-day review period before the statements are final ( Gotbaum, 2019 ). The fact that GASB and FASB members are both appointed by the external accounting overseeing body, FAF, offers a perception of more independence for them.
One of the projects currently underway is the accounting and reporting of government land project, divided into two projects SFFAS 6 and SFFA 29. SFFAS 6 concerns land and the rights acquired in connection with other PP&E to be capitalized at the cost incurred to bring the assets to suitable conditions for use. SFFA 29 deals with disclosure for policies relating to land management, categories of land and physical quality information. These requirements seek to provide more appropriate means of accounting for land by tackling complete reports and the consistencies of the aforementioned.
Another project that the FASAB is currently working on is Classified Activities. This project seeks to tackle the conflict that may arise with the Department of Defense (DoD) due to unauthorized disclosure of information. The DoD identified some fields of the FASAB’s accounting principles that may lead to exposure of classified information. The objective of the project (SFFAS 56) is to balance the need for publicly available financial reports with the need to prevent disclosure of classified national security information ( Active Projects, 2019 ).
The FASAB standards are not proprietary since they can be viewed and accessed at their website. It differs from the FASB’s Codification which is acquired through subscription as well as the GASB’s Codification which has to be purchased.
References
Active Projects. (2019). Federal Accounting Standards Advisory Board. Retrieved 24 July 2019, from https://fasab.gov/projects/active-projects/
Mission. (2019). Federal Accounting Standards Advisory Board. Retrieved 24 July 2019, from https://fasab.gov/about-fasab/mission-objectives/
Gotbaum, J. (2019). Accounting for Social Insurance. Retrieved 24 July 2019, from https://www.whitehouse.gov/wp-content/uploads/2017/11/Accounting-for-Social-InsuranceFeb112000.pdf
