What is the GASB?
The Governmental Accounting Standards Board (GASB, or "gaz-bee") is the private, nonpartisan, nonprofit organization that works to create and improve the rules U.S. state and local governments follow when accounting for their finances and reporting them to the public. While the GASB does not have the power to enforce compliance with the standards it promulgates, the authority for its standards is recognized under the Rules of Conduct of the AICPA. Also, legislation in many states requires compliance with GASB standards, and governments usually are expected to prepare financial statements in accordance with those standards when they issue bonds or notes or otherwise borrow from public credit markets.
In June 1999, the GASB enacted sweeping changes in the way governments report their finances to the public. These revisions are embodied in GASB Statement 34. This statement applies to all state and local governments, including public school districts, public colleges, public hospitals and healthcare organizations, public museums and cultural institutions, libraries, public employee retirement systems and so on. The Town of Thomaston implemented these changes in the fiscal year beginning July 1, 2002.
Most government services are unlike private-sector business in that, governments do not charge citizens directly for most services they receive, but rather finance services with taxes and other fees applied generally to the public. Because citizens have little choice about paying these taxes and fees, and because it is not always clear how the taxes they pay relate to the services they receive in return, governments must take special care to demonstrate that they have been accountable to the public. Financial statements are an important way for governments to demonstrate their accountability.
The first two financial statements added as part of GASB 34 provide comprehensive information about the entire government. The "Statement of net assets" allows you to identify things of value your government owns, the amounts it owes to others and what is left after liabilities have been satisfied. You can determine if your government's fiscal status is improving or declining, assess your government's ability to cover costs and to continue financing services in the future and find out what resources your government can use to provide new services or start new programs. The "Statement of Activities" allows you to see where your government gets resources and what it uses them for. You can find out what it costs your government to provide services, determine the extent to which services cover their own costs with user fees, charges and grants, identify out-of-the-ordinary costs and unusual sources of financing. This statement also shows you if there were sufficient resources raised to cover the costs for the fiscal year.