Accounting - GAAP PTKelly

a common set of accounting principles, standards, and procedures issued by the Financial Accounting Standards Board (FASB)

Public companies in the U.S.must follow GAAP when their accountants compile financial statements.

A combination of authoritative standards (set by policy boards) and the commonly accepted ways of recording and reporting accounting information.

Aims to improve the clarity, consistency, and comparability of the communication of financial information.

GAAP - USA based firms

IFRS - Much of World

The accountant has adhered to GAAP rules and regulations as a standard.

Unanimous agreement

Accountants commit to applying the same standards throughout the reporting process, from one period to the next, to ensure financial comparability between periods.

Accountants are expected to fully disclose and explain the reasons behind any changed or updated standards in the footnotes to the financial statements.

The accountant strives to provide an accurate and impartial depiction of a company’s financial situation.

The procedures used in financial reporting should be consistent, allowing comparison of the company's financial information.

Both negatives and positives should be reported with full transparency and without the expectation of debt compensation.

Emphasizing fact-based financial data representation that is not clouded by speculation.

While valuing assets, it should be assumed the business will continue to operate.

Entries should be distributed across the appropriate periods of time. For example, revenue should be reported in its relevant accounting period.

Accountants must strive to fully disclose all financial data and accounting information in financial reports.

Derived from the Latin phrase “uberrimae fidei” used within the insurance industry. It presupposes that parties remain honest in all transactions.