Certified Government Financial Manager (CGFM) Practice Exam 2026 – Your All-in-One Guide to Exam Success!

The correct choice is associated with the Governmental Accounting Standards Board, known as GASB. This organization is specifically tasked with establishing and maintaining accounting standards for state and local government entities in the United States. GASB's primary goal is to promote transparency, accountability, and effective communication of financial information in the public sector.

GASB develops and issues Statements of Governmental Accounting Standards, which provide guidance on how to prepare and present financial statements for governmental entities. This includes standards for measurement, recognition, and disclosure of financial transactions, ensuring that stakeholders, including citizens, investors, and governmental officials, have access to reliable and comparable financial information.

In contrast, other organizations mentioned serve different purposes. For instance, the Federal Accounting Standards Advisory Board (FASAB) governs federal government accounting, while the Financial Accounting Standards Board (FASB) oversees private-sector accounting standards. The American Institute of Certified Public Accountants (AICPA) focuses on setting standards for CPA practices and does not set GAAP for government entities. Thus, understanding the role of GASB is crucial for recognizing how accounting standards are applied specifically within the context of state and local governments.