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GASB Just Dropped New Numbers on GAAP in Government Finance
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Subscribe26 MAR 2025 / GASB REPORTING
If you thought GAAP was just a "because-they-have-to" kind of deal, think again. A recent study from the Governmental Accounting Standards Board (GASB) shows that even when it’s not required, local governments are still stepping up and sticking to GAAP like it’s the hottest ticket in town. So, what’s the deal? Why are governments choosing GAAP when no one’s twisting their arm?
Let’s be real: In public finance, trust is the currency. GAAP isn’t just a rulebook, it’s a signal. It tells investors, taxpayers, credit agencies, and regulators that books are clean and comparable across the board. Think of it like rolling up to a credit check with a perfect score, it just makes everyone breathe easier. GASB analyzed 2,259 audited governments (states, counties, municipalities, and special districts) using data from the 2021 Census of Governments and auditor reports. Here's what they found:
And when grouped by revenue and total debt, GAAP use jumps to a wild 93%–99% among local governments.
Governments with more debt, larger revenues, or a Single Audit requirement were way more likely to choose GAAP, even without being told to,” GASB noted. Compared to today’s stats, 2004’s compliance rates were noticeably lower:
Fast-forward to 2025: 89% of audited special districts now use GAAP. That’s a major glow-up for some of the most resource-constrained public entities.
Turns out, three things are driving the love:
The study also shows that some states offer well-developed alternatives (think Indiana, Kansas, and Washington) that make non-GAAP reporting more tempting, especially for smaller governments.
The Financial Data Transparency Act of 2022 is pushing U.S. public finance into the digital age, calling for taxonomies that support both GAAP and non-GAAP frameworks. GASB’s latest study sets the foundation for that future, mapping who’s using what and why. Its replicable regression model doesn’t just explain current trends—it predicts future shifts in GAAP utilization. That means policymakers and finance pros now have a data-driven lens to track compliance, anticipate change, and push for smarter reporting. GAAP may not be legally mandatory everywhere, but in today’s transparency-driven world, choosing it says a lot. Want more expert takes like this? Sign up for the MYCPE ONE Insights newsletter and never miss a financial trend that matters.
Until next time…
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