Page 362 - Encyclopedia of Business and Finance

eobf_G 7/5/06 3:03 PM Page 339

G

GATT ments of Financial Accounting Standards, Interpretations,
and Technical Bulletins, the American Institute of Certi-
SEE Trading Blocs
fied Public Accountants (AICPA) issues Statements of
Position, Audit and Accounting Guides, and Practice Bul-
letins, and the FASB Emerging Issues Task Force (EITF)
issues EITF Abstracts.
GDP
It may seem that accounting principles could be gen-
SEE Gross Domestic Product (GDP)
erally accepted because of popular vote or consensus of
opinion. However, generally accepted accounting princi-
ples is a technical accounting phrase defined in Account-
ing Principles Board (APB) Statement No. 4, Basic
GENERAL
Concepts and Accounting Principles Underlying Financial
ACCOUNTING OFFICE Statement of Business Enterprises, as “the conventions,
(GAO) rules, and procedures that define accepted accounting
practice at a particular time.” GAAP includes not only
SEE United States Government Accountability Office
broad guidelines of general application but also detailed
practices and procedures that provide a standard by which
to measure financial presentations. For the most part, in
financial reporting, generally accepted implies substantial
GENERALLY ACCEPTED
authoritative support.
ACCOUNTING
PRINCIPLES THE GAAP HIERARCHY
Most individuals who understand the basics of financial Although there is no single reference source for GAAP,
reporting are familiar with the phrase generally accepted there is a hierarchy established by the AICPA in Statement
accounting principles (GAAP) and will readily identify the on Auditing Standards No. 69, The Meaning of “Present
Financial Accounting Standards Board (FASB) as the stan- Fairly in Conformity With Generally Accepted Accounting
dard-setting body in the United States responsible for Principles” in the Independent Auditor’s Report (SAS 69). At
establishing accounting principles for nongovernmental the foundation of that hierarchy are the principles estab-
entities. However, some may not be aware that there is no lished by the FASB and its predecessors, the APB and the
single reference source for GAAP because these principles AICPA Committee on Accounting Procedure. From that
are derived from a variety of sources. For example, foundation, the hierarchy formulates a pecking order for
although the FASB is responsible for issuing FASB State- all the rules and procedures that are incorporated in the

339