What is GASB? The Complete Guide

What is GASB?

The Governmental Accounting Standards Board (GASB) is the independent organization that sets U.S. accounting and financial reporting standards for state and local governments. GASB defines how public entities measure, record, and report their financial activity, ensuring clear, consistent, and reliable data for taxpayers, public officials, and investors.

GASB was established in 1984 and is often pronounced “Gazbee.” It continues to update its guidance, with recent standards including GASB 101-104, which introduce changes to compensated absences, risk disclosures, and the overall financial reporting framework.

This guide covers how GASB works, the relationship with GAAP, the number of GASB statements, and the importance of GASB standards for U.S. municipal and governmental entities. It also addresses common FAQs and discusses the benefits of using lease accounting software in light of recent GASB changes.

Key Takeaways

• ​GASB sets accounting and financial reporting standards for U.S. state and local governments to ensure accuracy, transparency, and consistency.
• ​GASB updates 101–104 introduce compensated absences, risk disclosures, and changes to the financial reporting model.
• ​GASB 87 and GASB 96 reshape lease accounting, requiring entities to recognize leases and SBITAs on the balance sheet with standardized calculations and disclosures.
• ​Manual compliance is possible but challenging, especially for governments managing many leases across departments.
• ​Automation and purpose-built lease accounting software reduce compliance risk, streamline calculations, and simplify reporting for GASB 87 and 96.

Newest GASB Updates

• ​Statement No. 102 - Certain Risk Disclosures: Provides information related to a governmental organization's vulnerabilities from concentrations and constraints.
• ​Statement No. 103 - Financial Reporting Model Improvements: Improves key components of the financial reporting model to increase its effectiveness for decision making and accountability.
• ​Statement No. 104 - Disclosure of Certain Capital Assets: Provides essential information about certain types of capital assets in government financial statements.

Purpose of GASB

GASB reviews existing and establishes new accounting standards, and also educates the public about its standards. It hosts discussions, speeches, roundtables, and issues user guides to help taxpayers understand financial statements. Feedback from organizations and accountants often leads to the creation or improvement of accounting standards.

How GASB Works

GASB consists of seven board members (six part-time, one full-time chairman) and is supported by staff and the Governmental Accounting Standards Advisory Council (GASAC), a group of about 30 experts who advise on issues and new agenda items. GASB is funded by publishing revenue, investment income, and accounting support fees from municipal bond dealers.

Number of GASB Statements

There are about 100 GASB standards, which are continually monitored, updated, and reshaped by ongoing GASB updates.

Recent and Ongoing GASB Standards

GASB 101-104: Recent Updates

• ​GASB Statement No. 101 – Compensated Absences: Updates recognition and measurement of compensated absences, clarifying when liabilities should be recorded.
• ​GASB Statement No. 102 – Certain Risk Disclosures: Introduces new disclosure requirements related to concentration risks and constraints.
• ​GASB Statement No. 103 – Financial Reporting Model Improvements: Enhances the governmental financial reporting model for better interpretation and accountability.
• ​GASB Statement No. 104 – Disclosure of Certain Capital Assets: Expands disclosure requirements for specific capital assets.

These updates aim to modernize government accounting and improve financial statement clarity.

GASB 87 and GASB 96: Foundational Standards

• ​GASB 87 (Leases): Effective for fiscal years after June 15, 2021, requires governments to recognize lease liabilities and right-of-use assets on the balance sheet.
• ​GASB 96 (SBITAs): Effective for fiscal years after June 15, 2022, extends the model to subscription-based IT arrangements, requiring recognition of subscription assets and liabilities for qualifying cloud-based software agreements.

These standards continue to present challenges in implementation, data accuracy, disclosures, and audit readiness, especially for entities with large or decentralized lease and IT portfolios.

Development of GASB Standards

GASB uses a “Rule of Procedure” designed to encourage broad public participation. The process involves:

1. 1.Identifying an accounting problem and potential solutions.
2. 2.Gathering information from affected parties (companies, governments, auditors, investors).
3. 3.Consulting with advisory academics and experts.
4. 4.Conducting research and publishing a discussion document for public input.
5. 5.Distributing an exposure draft of the proposed standard.
6. 6.Holding public hearings or roundtables.
7. 7.Redeliberating based on feedback and issuing the final standard.

After issuing a new standard, GASB educates the public to ensure a smooth transition.

GAAP vs GASB

GASB is the organization that determines and updates generally accepted accounting principles (GAAP) for government entities. While GASB and GAAP overlap, GASB specifically enforces and updates GAAP for governments.

GASB vs Other Standard-Setting Bodies (FASB)

GASB and the Financial Accounting Standards Board (FASB) both develop accounting standards, but GASB focuses on government entities, while FASB covers public and private-sector organizations. Both are overseen by the Financial Accounting Foundation (FAF).

Who Must Follow GASB?

GASB standards apply to U.S. state and local governments and other municipal-type entities (airports, school districts, some hospitals). These entities are required to follow GASB standards.

GASB and Lease Accounting (Why Automation Helps)

GASB standards directly impact how governments handle lease and subscription-based IT arrangements. GASB 87 and 96 require governments to bring these agreements onto the balance sheet, calculate liabilities, and produce standardized disclosures. Managing this data manually increases risk, while automation:

• ​Centralizes leases and SBITAs
• ​Automates calculations for liabilities, amortization schedules, and right-of-use assets
• ​Generates required disclosures instantly
• ​Keeps reporting consistent across departments
• ​Reduces compliance risk by following the latest GASB standards

Automation helps government teams increase accuracy, save time, and strengthen reporting without additional workload.

GASB FAQs

What are the newest GASB standards?

• ​Statement No. 103 (April 2024): Financial Reporting Model Improvements, effective for fiscal years after June 15, 2025.
• ​Statement No. 104 (September 2024): Disclosure of Certain Capital Assets, effective for fiscal years after June 15, 2025.

How is GASB different from IFRS?

GASB sets standards for U.S. state and local governments, while IFRS standards are developed by the International Accounting Standards Board (IASB) and used globally.

What does the GASB do?

GASB creates, reviews, and updates accounting standards for government entities.

What is the relationship between GASB and GAAP?

GASB creates and reinforces GAAP for U.S. state and local governments.

What are the GASB principles?

GASB principles are generally accepted accounting principles (GAAP).

Who must follow GASB?

U.S. states, local governments, and other municipal-type entities.

How many GASB standards are there?

GASB has released 104 standards over its 40+ years of operation.

What is the latest GASB?

Statement No. 104, issued September 2024, effective for fiscal years after June 15, 2025.