The GASB turns 25: a retrospective.

• Author: Patton, Terry K.

"Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning."

Winston Churchill, in a November 1942 speech

The Governmental Accounting Standards Board (GASB) observes its 25th anniversary this year. The organization was created in 1984 as the authoritative body to establish financial reporting standards--generally accepted accounting principles (GAAP)--for state and local governments. This is a brief story of the first years of the GASB, including its major standards and the people who have done the work--the board and staff members.

Before the GASB was formed, the long-standing National Council on Governmental Accounting (NCGA) established financial reporting standards for state and local governments. The NCGA was a 21-member board that was created and supported by the Municipal Finance Officers Association (renamed the Government Finance Officers Association in 1984). Although the NCGA had issued six statements, 11 interpretations, and one concepts statement that had advanced governmental accounting, it was not considered an independent standards-setting body because most of its members came from state and local governments, including many from management.

During the late 1970s and early 1980s, parties who were interested in governmental financial reporting debated whether the NCGA or another body such as the Financial Accounting Standards Board (FASB) should establish GAAP for state and local governments. The GASB was the answer to that debate.

The GASB is an independent standards-setting body that is overseen by the Financial Accounting Foundation, which also oversees the FASB. GASB Statement No. 1, Authoritative Status of NCGA Pronouncements and AICPA Industry Audit Guide, was issued in July 1984. It recognized the NCGA Statements and Interpretations as the authoritative standards starting point for state and local government GAAP. Through the years, the GASB has built upon this base with input from its constituent groups--investors and creditors, legislative and oversight bodies, the citizenry, and financial statement preparers and auditors--to create the standards that now exist.

Since its inception, the GASB has issued 54 statements, six interpretations, 14 technical bulletins, and five concepts statements. The first 25 years of the GASB can be viewed in many ways, but one perspective is to consider the significant improvements to governmental financial reporting that have occurred during the tenures of each of the three GASB chairmen.

THE ANTONIO ERA

The GASB, as originally constituted, was composed of five board members: four part-time members and a full-time chairman. Jim Antonio, the board's first chairman, presided over the GASB during its formative years from its inception until June 1995. He and Marty Ives, the board's first vice-chairman and director of research and technical activities, worked with constituent groups to develop and prioritize the original GASB agenda, which has essentially been completed. (1) David Bean has served as the director of research and technical activities since 1990; Jay Fountain was assistant director of research from 1986 until 2004.

The original agenda primarily included projects on topics that governmental accountants had discussed for many years--those subjects included financial reporting for pensions, the financial reporting entity, and the overall financial reporting model. The Antonio era was marked by completion of some of the major projects on the original agenda and the development of standards that reacted to standards issued by the FASB or to economic events.

One of the GASB's early issues arose because the initial GAAP hierarchy--effective from 1984-1989--required state and local governments to follow FASB guidance in situations where there was no GASB guidance. Thus, in several instances when the GASB was planning to issue guidance on a topic, it issued standards that essentially stated, "Do Not Apply FASB Statement No. XX." For example, GASB Statement No. 4, Applicability of FASB Statement No. 87, "Employers' Accounting for Pensions," to State and Local Governmental Employers, effectively made FASB Statement No. 87 inapplicable to governments while the GASB was developing pension guidance for state and local governments.

Exhibit 1: GASB Member History Current Board Members Robert H. Attmore, Chairman | 2004-2009 | former deputy state comptroller, state of New York Michael D. Belsky | 2008-2012 | mayor of Highland Park IL and former managing director, Fitch William W. Holder | 2000-2010 | professor of accounting, University of Southern California Jan I. Sylvis | 2007-2012 | chief of accounts, State of Tennessee Marcia Taylor | 2005-2010 | assistant...