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Accounting Standard Setting

The Securities and Exchange Commission (SEC) has statutory authority to set accounting standards in the United States. However, the SEC has largely deferred to private sector entities or board to establish generally accepted accounting principles (GAAP) in the United States.  Historically, three primary private sector entities have established accounting standards in the United States: 

Committee on Accounting Procedure (CAP) – was an entity of the American Institute of Certified Public Accountants (AICPA).  CAP issued accounting standards from 1939 to 1959.  CAP issued Accounting Research Bulletins. 

Accounting Principles Board (APB) – was also an entity of the AICPA.  The APB issued accounting standards from 1959 to 1973.  The APB issued Opinions and Interpretations.    

Financial Accounting Standards Board (FASB) – established in 1973, is the current day private sector accounting standard setter. The FASB issues Statements of Financial Accounting Standards, Interpretations, Technical Bulletins, Staff Positions and Implementation Guides.  The FASB also established the Emerging Issues Task Force (EITF) to deal with more specific accounting issues or particular application.  The EITF drafts issue consensus which are ultimately reviewed by the FASB.

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Filed under: ACADEMIC

Finding the House of GAAP on the Internet

One of the first lessons in most accounting courses is the House of GAAP, or what weight certain accounting guidance carries in generally accepted accounting principles. gaap360 takes you on a tour of the Internet to locate available  accounting principles within the categories of the infamous House. Some of the pieces of the House are free and available on the Internet – others come at a price.      

The House

The House of GAAP was first published in June 1984 by Steven Rubin in the Journal of Accountancy.  The House is comprised of four hierarchical categories of generally accepted accounting principles.  The four categories are set upon a foundation of basic concepts and broad principles.  Technically, the foundation does not establish GAAP, but rather provides basic principles and precepts by which GAAP is established. 

If accounting guidance is provided in more than one category, the guidance in the higher category (Category A being the most authoritative) has precedence.

Currently, the FASB, along with the International Accounting Standards Board (IASB), is reviewing the sources of GAAP in its ongoing Conceptual Framework Project.  This project may have future impact on the House.        

The Foundation

v      Financial Accounting Standards Board (FASB) Concept Statements Free

Category A (the most authoritative GAAP)

v      FASB Statements of Financial Accounting Standards Free

v      FASB Interpretations Free

v      FASB Staff Positions Free

v      AICPA Opinions and Interpretations (not superseded) $

v      AICPA Accounting Research Bulletins (not superseded) $

v      SEC Rules and Interpretive Releases (for SEC registrants) Free

Category B (less authoritative GAAP than Category A)

v      FASB Technical Bulletins Free

v      AICPA Industry Audit and Accounting Guides $

v      AICPA Statements of Position (not superseded) $

Category C (less authoritative GAAP than Categories A and B)

v      EITF Consensus Positions Free

v      AICPA Practice Bulletins $

Category D (the least authoritative GAAP)

v      AICPA Accounting Interpretations Free

v      FASB Staff Q & As Free

In addition, widely recognized industry practices fall into this category.

Useful websites for all accounting students

v      Securities & Exchange Commission

v      Public Company Accounting Oversight Board

v      Financial Accounting Standards Board (including EITF)

v      American Institute of Certified Public Accountants

v      International Accounting Standards Board

Filed under: ACADEMIC

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