Federal endorsement of GAAP began with legislation like the Securities Act of 1933 and the Securities Exchange Act of 1934, laws enforced by the U. Securities and Exchange Commission (SEC) that target public companies.
Federal endorsement of GAAP began with legislation like the Securities Act of 1933 and the Securities Exchange Act of 1934, laws enforced by the U. Securities and Exchange Commission (SEC) that target public companies.Today, the Financial Accounting Standards Board (FASB), an independent authority, continually monitors and updates GAAP. states officially require local governments to adhere to GAAP, the Governmental Accounting Standards Board (GASB) estimates that approximately 70% of county and local financial offices do anyway.Members of the public are invited to attend FAF organization meetings in person or through live webcasts.
Beyond the 10 principles, GAAP compliance is built on three rules that eliminate misleading accounting and financial reporting practices.
These rules create consistent accounting and reporting standards, which provide prospective and existing investors with reliable methods of evaluating an organization's financial standing.
According to the company's disclosure, the discrepancies between the GAAP and non-GAAP figures arise from adjustments regarding acquisition and restructuring expenses, equities-based compensation expenses, amortization of acquired assets, and other technicalities impacting its current financial performance.
The company believes that presenting both GAAP and non-GAAP data creates a complete picture of its past performance and is a useful predictor of future results.
In response, the federal government, along with professional accounting groups, set out to create standards for the ethical and accurate reporting of financial information.
According to Stephen Zeff in The CPA Journal, GAAP terminology was first used in 1936 by the American Institute of Accountants (AIA).
The board is comprised of seven full-time, impartial members, ensuring it works for the public's best interest.
In addition, the board is monitored by the 30-person Financial Accounting Standards Advisory Council (FASAC).
Many different parties rely on government financial statements, including constituents and lawmakers.
Fairness and transparency are a priority of the GASB, and their own processes and communications are available for public review.