Financial Accounting Standards

GAAP

The Generally Accepted Accounting Principles (GAAP) are the ruling accounting principles, standards and procedures that regulate financial accounting. These are rules that have come from an authoritative accounting rule-making body or that over time a given practice has become accepted as appropriate because of universal application.

Today the authoritative literature for GAAP is encompassed in the Financial Accounting Standards Board Accounting Standards Codification (or the Codification). All other literature not included in the Codification is non-authoritative. In case a subject is not covered by the Codification other accounting literature should be considers, such as the writing of the FASB, APB, CAP, IFRS or other professional literature. the Codification is linked here.

The Codification is organized in a hierarchical structure of Topic-Subtopic-Section-Paragraph, so that ASC 310-10-05-6 breaks down like this

Topic	ASC 310 Receivables
Subtopic	ASC 310-10 Overall
Section	ASC 310-10-05 Overview and Background
Paragraph	ASC 310-10-05-6 Factoring Arrangements

An outline of the major topics in the Codification:

• 100s General Principles
• 200s Presentation
• 300s Assets
• 400s Liabilities
• 500s Equity
• 600s Revenue
• 700s Expenses
• 800s Broad Transactions
• 900s Industry

Securities and Exchange Commission

The Securities and Exchange Commission (SEC) is an agency of the United States Government. It was created with the Securities Exchange Act of 1934, and is charged with enforcing that act as well as: Securities Act 1933, the Trust Indenture Act of 1939, the Investment Company Act of 1940, the Investment Advisers Act of 1940, the Sarbanes-Oxley Act of 2002, and other statures.

In addition to enforcement the SEC has the responsibility to develop accounting standards. The SEC encouraged the creation of private standard setting bodies because it believed that the private sector had the needed talent and resources to achieve this task (see CAP, APB, FASB). Mostly the SEC has let the private sector be the formulator and implementer of standards, but reserving the right to encourage and overrule.

Financial Accounting Standards Board

The Financial Account Standards Board (FASB) came into existence in 1973 after recommendations in the Wheat Committee findings; it replaced the APB and CAP of the AICPA. Also created in ’73 were the Financial Accounting Foundation (FAF) to provide oversight and funding for FASB and Financial Accounting Standards Advisory Committee (FASAC) to provide expertise on various projects.

Historical Accounting Rules Bodies

American Institute of Certified Public Accountants

American Institute of Certified Public Accountants (AICPA) is the oldest authoritative source of GAAP in the United States going back to its origin in 1887 as well as its contributions through CAP and APB. Today it no longer is a source of authoritative accounting guidance for public companies.

Committee on Accounting Procedure

The Committee on Accounting Procedure (CAP) was the first private sector organization that set accounting standards in the United States. It was assembled in 1939 by the American Institute of Accountants (todays AICPA), at urging of the SEC. From 1939 to 1959 it published 51 Accounting Research Bulletins

Accounting Principles Board

The Accounting Principles Board (APB) was formed by the AICPA in 1959 to replace CAP. Between 1959 and 1973 it issued 31 opinions and developed a conceptual framework for financial accounting.

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The Accounting Research Bulletins have all been superseded by the Accounting Standards Codification (ASC) and their titles are listed here for historical reference.

No	Accounting Research Bulletin
1	General Introduction and Rules Formerly Adopted
2	Unamortized Discount and Redemption Premium on Bonds Refunded
3	Quasi-Reorganization or Corporate Readjustment—Amplification of Institute Rule No. 2 of 1934
4	Foreign Operations and Foreign Exchange
5	Depreciation on Appreciation
6	Comparative Statements
7	Reports of Committee on Terminology
8	Combined Statement of Income and Earned Surplus
9	Report of Committee on Terminology
10	Real and Personal Property Taxes
11	Corporate Accounting for Ordinary Stock Dividends
12	Report of Committee on Terminology
13	Accounting for Special Reserves Arising Out of the War
14	Accounting for United States Treasury Tax Notes
15	Renegotiation of War Contracts
16	Report of Committee on Terminology
17	Post-War Refund of Excess-Profits Tax
18	Unamortized Discount and Redemption Premium on Bonds Refunded (Supplement)
19	Accounting under Cost-Plus-Fixed-Fee Contracts
20	Report of Committee on Terminology
21	Renegotiation of War Contracts (Supplement)
22	Report of Committee on Terminology
23	Accounting for Income Taxes
24	Accounting for Intangible Assets
25	Accounting for Terminated War Contracts
26	Accounting for the Use of Special War Reserves
27	Emergency Facilities
28	Accounting Treatment of General Purpose Contingency Reserves
29	Inventory Pricing
30	Current Assets and Current Liabilities; Working Capital
31	Inventory Reserves
32	Income and Earned Surplus
33	Depreciation and High Costs
34	Recommendation of Committee on Terminology; Use of Term "Reserve"
35	Presentation of Income and Earned Surplus
36	Pension Plans; Accounting for Annuity Costs Based on Past Services
37	Accounting for Compensation in the Form of Stock Options
38	Disclosure of Long-Term Leases in Financial Statements of Lessees
39	Recommendation of Subcommittee on Terminology; Discontinuance of the Use of the Term "Surplus"
40	Business Combinations
41	Presentation of Income and Earned Surplus
42	Emergency Facilities—Depreciation, Amortization, and Income Taxes
43	Restatement and Revision of Accounting Research Bulletins
44	Declining-Balance Depreciation
45	Long-term Construction-type Contracts
46	Discontinuance of Dating Earned Surplus
47	Accounting for costs of Pension Plans
48	Business Combinations
49	Earnings per Share
50	Contingencies
51	Consolidated Financial Statements

The APB Opinions have been superseded by the Accounting Standards Codification (ASC) and their titles are listed here for historical reference.

No	Accounting Principles Board Opinions
1	New Depreciation Guidelines and Rules
2	Accounting for the "Investment Credit"
3	The Statement of Source and Application of Funds
4	Accounting for the "Investment Credit"
5	Reporting of Leases in Financial Statements of Lessee
6	Status of Accounting Research Bulletins
7	Accounting for Leases in Financial Statements of Lessors
8	Accounting for the Cost of Pension Plans
9	Reporting the Results of Operations
10	Omnibus Opinion-1966
11	Accounting for Income Taxes
12	Omnibus Opinion—1967
13	Amending Para. 6 of APB Opinion No. 9, Application to Commercial Banks
14	Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants
15	Earnings per Share
16	Business Combinations
17	Intangible Assets
18	The Equity Method of Accounting for Investments in Common Stock
19	Reporting Changes in Financial Position
20	Accounting Changes
21	Interest on Receivables and Payables
22	Disclosure of Accounting Policies
23	Accounting for Income Taxes-Special Areas
24	Accounting for Income Taxes—Investments in Common Stock Accounted for by the Equity Method
25	Accounting for Stock Issued to Employees
26	Early Extinguishment of Debt
27	Accounting for Lease Transactions by Manufacturer or Dealer Lessors
28	Interim Financial Reporting
29	Accounting for Non-monetary Transactions
30	Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions
31	Disclosure of Lease Commitments by Lessees