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Objective 1.01: Generally Accepted
Accounting Principles (GAAP)
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Generally Accepted Accounting Principles
Defined as the set of accepted industry rules, practices and guidelines for financial accounting
Includes the standards, conventions, and rules accountants follow in recording and summarizing transactions, and in the preparation of financial statements
What is GAAP?
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AICPA FASBSECGASB
Governing Bodies of GAAP
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American Institute of Certified Public Accountants (CPA)
Sets ethical standards for the CPA profession
Sets U.S. auditing and GAAP standards Develops and grades the Uniform CPA
Examination http://www.aicpa.org
AICPA
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Financial Accounting Standards Board
Establishes and improves standards of financial accounting by non-governmental entities (GAAP)
www.fasb.org
FASB
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Securities and Exchange Commission◦ Has authority to establish reporting and disclosure
requirements Holds the primary responsibility for:
◦ Enforcing federal securities laws◦ Regulating the securities industry◦ Regulating the stock market and◦ Preventing corporate abuse of investors
SEC
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Enforcement authority granted by Congress to:
Bring civil enforcement actions against individuals and companies who:◦ Commit accounting fraud◦ Provide false information◦ Engage in insider trading◦ Violate securities laws
Bring criminal enforcement actions to prosecute individuals and companies for criminal offenses
SEC Authority
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notes stock treasury stock security future bond debenture certificate of interest participation in any profit-sharing
agreement
Securities
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Governmental Accounting Standards Board
To establish and improve standards of state and local governmental accounting and financial reporting (GAAP)
www.gasb.org
GASB