Objective 1.01: Generally Accepted Accounting Principles (GAAP)

1. Objective 1.01: Generally Accepted Accounting Principles (GAAP)

2. What is GAAP? • 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

3. Governing Bodies of GAAP • AICPA • FASB • SEC • GASB

4. AICPA • 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

5. FASB • Financial Accounting Standards Board • Establishes and improves standards of financial accounting by non-governmental entities (GAAP) • www.fasb.org

6. SEC • 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

7. SEC Authority • 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

8. Securities • notes • stock • treasury stock • security future • bond • debenture • certificate of interest • participation in any profit-sharing agreement

9. GASB • Governmental Accounting Standards Board • To establish and improve standards of state and local governmental accounting and financial reporting (GAAP) • www.gasb.org