Governmental Accounting Standards Board Statement 34: Perceptions of Texas Finance Officers




Shirota, Keiji

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The recent corporate scandals have made us aware that even Fortune 500 companies with seemingly stellar performances may not be financially as well off as their financial statements suggest. The corporations involved in the recent flow of scandals have previously been considered as top-notch companies. Despite their good reputation, some of them have declared bankruptcy, and one lost its auditing license in Texas. These events pose a question as to how reliable financial statements are. Financial statements are not only used in the private sector, but also used in the public sector to allow decision makers to communicate with their stakeholders. Stakeholders in the corporate setting may include stockholders, bondholders, and employees. In the public setting, stakeholders may include citizens, bondholders, and decision makers themselves. Even though stakeholders demand accurate information regarding the well-being of their respective organizations, the recent corporate scandals infer that information may not be accurate or adequate. There are two organizations that are tasked to establish and improve financial reporting standards in US: one for the private sector and the other for the public sector. Their efforts to improve the reporting standard, known as Generally Accepted Accounting Principle (GAAP), have met considerable resistance in the past.[1] One of which is the focus of this research. Statement 34 issued by the Governmental Accounting Standards Board (GASB) has caused uproar among public finance officials all over the nation. [2] Statement 34 introduced one important concept to the public sector, which is operational accountability. But, in order to do so, the GASB increased the reporting requirement of state and local governments. This apparently led to a series of debate over the efficacy of Statement 34. Thus, the purpose of this research project is to describe the attitudes and perceptions of public finance officials in Texas about Statement 34. The researcher explores the attitudes and perceptions by surveying one-hundred public finance officials in Texas about Statement 34 by the Governmental Accounting Standards Board. The results indicated that public finance officials in Texas agreed that Statement 34 compliant financial statements provided adequate information for fiscal and operational accountability. However, they are not as comprehensible as originally intended. In addition, public finance officials in Texas agreed that the costs of implementation outweigh its benefits. [1] GAAP: Generally Accepted Accounting Principle established by the GASB and the Financial Accounting Standards Board. [2] GASB is a private sector agency founded by the Financial Accounting Foundation to establish accounting and reporting standards in the public sector. The standards set by the GASB become the Generally Accepted Accounting Principle in the public sector, otherwise known as GAAP (Wilson and Kattelus 4).


An Applied Research Project Submitted to the Department of Political Science, Texas State University-San Marcos, in Partial Fulfillment for the Requirements for the Degree of Masters of Public Administration, Fall 2003.


government, accounting standards, Texas, finance, financial reporting standards, Public Administration


Shirota, K. (2003). Governmental accounting standards board statement 34: Perceptions of Texas finance officers. Masters of Public Administration, Texas State University, San Marcos, Texas.


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