What organization defines GAAP for state and local government entities?

The Governmental Accounting Standards Board (GASB) is the authoritative body that establishes generally accepted accounting principles (GAAP) specifically for state and local governments. GASB's main purpose is to ensure that financial reporting for government entities is transparent, consistent, and useful for users, including taxpayers, creditors, and other stakeholders.

GASB develops standards that guide how financial statements are prepared and presented, ensuring adherence to applicable accounting principles that reflect the unique nature and structure of governmental operations. This includes considerations for different types of fund accounting and reporting for governmental entities, which differ significantly from private sector accounting standards.

In contrast, other entities mentioned do not set GAAP for state and local governments. The AICPA primarily focuses on the accounting profession but does not establish GAAP for government entities. The Government Performance and Results Act (GPRA) deals with performance measurement and accountability but does not pertain specifically to accounting principles. Lastly, the Internal Revenue Service (IRS) is responsible for tax regulations and enforcement but does not define GAAP for any entity, including governmental entities.