Abstract This article aims to explain and illustrate how colleges and universities financial statements should be presented to effectively meet the relevance requirement of the Financial Accounting Standards Boards (FASB) conceptual framework. Some colleges and universities are private institutions while others are operated by governmental entities. While the FASB has jurisdiction over the accounting practices followed by private schools, the Governmental Accounting Standard Boards (GASB) has the authority to prescribe the accounting practices followed by state schools. As a result the GASB had to either accept or reject the application of the FASB requirement to state schools. Shortly after the issuance of the FASB statement, the GASB reacted to the statement by issuing a statement exempting state schools from its requirements.
Henke et al. (Thu,) studied this question.