Since the enactment of GAAP may affect many interests, much discussion occurs about who should develop GAAP and to whom it should apply. Groups, Organizations, And Regulatory Body That Shaped Generally Accepted Accounting Principles (GAAP) The GAAP has evolved based on these established concepts, standards, and best practices that are now “generally accepted” by companies, industries, central banks worldwide, financial institutions, and universities. Generally Accepted Accounting Principles began to be established with legislation such as the Securities Act of 1933 and the Securities Exchange Act of 1934. So the US federal government worked in collaboration with economic experts, with professional accounting groups, and other government agencies to establish financial reporting standards and practices that are consistent, accurate, and follow a legal framework. Many experts believed that the great depression resulted from some publicly-traded companies’ unregulated and non-standardized financial reporting practices. Generally Accepted Accounting Principles were eventually established in response to the 1929 Stock Market Crash and the Great Depression it caused. By following GAAP, companies can maintain transparency and credibility with investors, creditors, and other stakeholders.History of GAAP – How GAAP Was Formulated? Overall, GAAP is an essential component of financial reporting in the United States, as it ensures that financial statements are accurate, reliable, and comparable across different companies and industries.
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