GASB Releases Study on GAAP Utilization in U.S. State and Local Governments
On Mar. 24, the Governmental Accounting Standards Board's (GASB) released a study of the usage of Generally Accepted Accounting Principles (GAAP) by U.S. state and local governments.
The study, called “Financial Reporting Requirements for State and Local Governments: Evaluating GAAP Choice,” revealed that all U.S. states utilized GAAP, but only about three quarters of counties did the same.
GASB's study identifies and categorizes state-imposed financial reporting requirements for state, county, municipal and special district governments. it also includes a statistical model of the determinants of GAAP choice without a state requirement to utilize GAAP.
According to GASB, of the 2,259 governments in its sample, it projects that 1,530 have public debt and are required to file continuing disclosures with the Municipal Securities Rulemaking Board. GAAP usage in these 1,530 governments is almost like the overall population: 100% for states, 75% for counties and 71% for municipalities.
Additionally, GASB also calculated GAAP utilization rates in its full sample of 2,259 audited governments based on revenues and total debt outstanding. Utilizing these magnitude measures, GAAP usage rates are higher, 100% for states and between 93% and 99% for counties and municipalities, depending on the measure used.
In 1,372 counties, municipalities and special districts, GASB found that larger governments—those with more revenue— with more debt, and those subject to a Single Audit are more likely to use GAAP. By contrast, those governments in states with a well-developed alternative financial reporting framework—with supporting manuals and templates—are less likely to utilize GAAP.
To view of the summary of the report from GASB, click here.