GAAP and standard-setting organizations

GAAP

Generally Accepted Accounting Principles; U.S. guidelines for financial reporting.

Purpose of GAAP

To improve consistency, comparability, and decision usefulness of financial information.

SEC

Securities and Exchange Commission; government agency overseeing securities markets and public-company reporting.

Congress

The legislative body that created the SEC and gave it authority over public-company reporting.

CAP

Committee on Accounting Procedure; early U.S. accounting standard setter from 1938–1959.

APB

Accounting Principles Board; U.S. standard setter from 1959–1973.

FASB

Financial Accounting Standards Board; sets U.S. GAAP for nongovernmental entities.

FASB creation

FASB was created in 1973 and remains the primary U.S. nongovernmental standard setter.

EITF

Emerging Issues Task Force; addresses emerging accounting implementation issues.

EITF rulings

EITF decisions that are ratified by FASB and become part of U.S. GAAP.

GASB

Governmental Accounting Standards Board; sets standards for governmental entities.

IASB

International Accounting Standards Board; develops international accounting standards.

IFRS

International Financial Reporting Standards issued by the IASB.

ASU

Accounting Standards Update; a new FASB standard that updates the Codification.

FASB Accounting Standards Codification

The authoritative source of nongovernmental U.S. GAAP.

SFAC

statements of Financial Accounting Concepts; FASB’s theoretical guide for creating GAAP rules (non-authoritative).

U.S. GAAP versus IFRS

U.S. GAAP is standard U.S. accounting rules; IFRS is the global standard set by the IASB.

Convergence

Efforts by FASB and IASB to reduce differences between U.S. GAAP and IFRS.

Current status of GAAP–IFRS convergence

Full convergence is not expected in the foreseeable future.