Reform Government Accounting Standards
Many states have requirements to balance their budget every year, but because of the way they prepare financial reports, budgets that appear balanced are anything but. All too often, governments' official financial statements don’t reflect reality because they follow “cash based” accounting principles. What does that mean?
With cash-based accounting, financial reports show expenses only when money is paid, not when debt or future expenses are incurred. By only reporting cash spending, and not accumulated debt, the financial reports paint a much rosier – but far from accurate – picture of government finances.
This delusional and nontransparent approach to government accounting has had dire real-world consequences for cities, states and their citizens. When it comes time to pay the previously-hidden debt, elected officials face a sudden need to hike taxes or slash services—or both. People suffer.
The vast majority of state and local governments follow accounting standards set by the Governmental Accounting Standards Board (GASB). But GASB is trying to keep this faulty accounting. They want to continue cash-basis-like financial reporting for governmental funds statements. This reporting supports bad government budgeting practices like counting borrowing proceeds as revenue, and underfunding pension funding requirements, in order to “balance budgets.”
Now is the time to advocate for common-sense reforms to government accounting and financial reporting requirements. Truth in Accounting is mobilizing experts, advocacy organizations, watchdog groups, journalists and everyday citizens to let GASB know that we’re watching and demanding that they institute FACT-based accounting standards.
In March and April of 2021, the GASB hosted several public hearings via Zoom. Truth in Accounting mobilized thought leaders, elected officials, and everyday citizens to testify against GASB's proposals and advocate for FACT-based accounting. You can watch those testimonies below and click here to learn more about the GASB members.