Question

Explain why the Governmental Accounting Standards Board (GASB) and the Financial Accounting Standards Advisory Board (FASAB) include budgetary comparisons in their concept statements but the Financial Accounting Standards Board (FASB) does not.

Answer 1

As per Governmental Accounting Standards Board (GASB) budgetary comparisons is an important part of the basic financial statements and financial reporting. GASB helps the users to determine policies set with finance related rules and regulation. GASB and FASAB urge government to present the budgetary comparisons for the actual fund and any other major revenue fund that has an adopted annual budget. It helps in comparing the actual financial results with legal adopted budget. According to GASB standards, budgetary comparisons should include in the financial statement or schedules for government funds to which government annual budget is adopted

On the contrary FASB does not include budgetary comparisons because both FASB and GASB are parallel bodies. As per FASB budget does not clearly show the equity say for example, even we have a balance budget that meet legal formalities but still lacking financing maintenance which will not encourage equity.