Question

What is your opinion on this? Please see below.

GASB establishes guidelines in order to promote conformity, consistency, transparency and comparability of financial statements among governments to provide useful information for stakeholders. Prior to creating guidelines, GASB performs proper due diligence and an inclusive process to assure that the guidelines serve to reflect the true representation of a government’s financial condition. As such, yielding to the demand of Texas officials and rescinding Statement 45 would result in setting a precedent that could create chaos in accountability. If other governments followed suit, this would result in a lack of consistency and comparability and trickle down to a problematic situation for auditors and users. Additionally, how would auditors provide an opinion when there are multiple variables inconsistent with GAAP? It would seem prudent to not become the accounting version of the wild wild west.

Answer 1

It is essential to promote conformity, consistency, transparency and comparability of financial statements among governments since financial position of enterprise is useful to wide range of users in making economic decisions. Consistency principle is must to follow so that results reported from period to period are comparable and significant conclusion can be made while comparing.

The auditor is required to express his independent opinion based on the financial statements. If there are multiple inconsistencies , auditor won/t be able to synchronise and evaluate the date , hence auditor will not recognixe the matters relating to consistency of financial statements in his auditor's report which are having material effect on financial statements.