AGA Government Financial Manager GAFRB Question # 31 Topic 4 Discussion
GAFRB Exam Topic 4 Question 31 Discussion:
Question #: 31
Topic #: 4
When an accounting principle established by GASB conflicts with an accounting principle established by FASB. the preparer of financial statements for a local government should observe
A.
the principle established by GASB.
B.
the principle established by FASB.
C.
either the principle established by GASB or FASB, without additional disclosure.
D.
either the principle established by GASB or FASB, with additional disclosure required if the FASB principle is observed.
For state and local governments, GASB (Governmental Accounting Standards Board) is the authoritative standard-setting body. If a GASB principle exists, it must be followed, even if a FASB (Financial Accounting Standards Board) principle suggests a different approach.
FASB guidance may only be used in the absence of applicable GASB guidance — and even then, only when it does not conflict with governmental accounting objectives.
Relevant References:
GASB Statement No. 76 – The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments
GASB Concepts Statements
GAO and GFOA Reporting Manuals
Answer: A. the principle established by GASB
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