1. FASB and Standard Setting

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Generally Accepted Accounting Principles

GAAP addresses three aspects of financial reporting:

Recognition - when recorded on financial statements

Measurement - how recorded on financial statements

Disclosure - anything that is not on the financial statements

Organizations

The Financial Accounting Standards Board (FASB)

Private sector body that establishes GAAP

7 Full time members - Effective

Mission to improve the usefulness of financial reporting through addressing deficiencies and promoting international convergence

The Securities and Exchange Commission (SEC)

Formed by Congress in the 1933 act

Authority to establish GAAP - but SEC relinquished that task to the private sector (FASB)

Has enforcement authority

The American Institute of Certified Public Accountants (AICPA)

Professional Organization for practicing CPAs

Substantial input into the standard setting process

All past standard setting bodies were created by the AICPA

GAAP -- FASB Accounting Standards Codification (ASC): Made up of a compilation of pronouncements issued by FASB, APB, and CAP.

Non-Authoritative: FASB Concepts, AICPA Issues Papers, IFRS