accounting standards

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Generally Accepted Accounting Principles

Rules to which accountants adhere when preparing financial statements. The Generally Accepted Accounting Principles exist to ensure that American accountants are using the same or almost the same standards so that comparison of financial statements between or within a company is easy and accurate. They also promote transparency in accounting. The GAAP are set by the FASB. See also: International Financial Reporting Standards.

accounting standards

guidelines relating to the accounting treatment of the figures which are reported in the accounts of companies. They were introduced to reduce the possibility of having large variations in reported profits and to restrict the room available for manoeuvre by those charged with the task of preparing the accounts.

Prior to 1990 Statements of Recommended Practice (SORPS) and Statements of Standard Accounting Practice (SSAPS) were issued in the UK by a joint committee of the professional accounting organizations. These covered various matters, including:

Accounting policies; post balance sheet events and contingencies; earnings per share; taxation; stocks and long-term contracts; cash flow statements; research and development; and group accounts.

In 1990 the accountancy bodies set up a new organization to oversee accounting standards, the Accounting Standards Board which issued a number of statements that are now called Financial Reporting Standards (FRSS). The FRSs were drawn up to comply with both UK law, the Republic of Ireland law, and EU directives.

In recent years the International Accounting Standards Board (IASB) has overseen the development of International Financial Reporting Standards (IFRS). These standards now apply to all large quoted companies in the European Union, which from the beginning of 2005 are required to report their interim and final annual accounts expressed in terms of these standards. Application of these standards initially generate different reported profits and balance sheet asset values from those which would result from using national generally-agreed accounting principles or national financial reporting standards.

To date IFRS apply only to EU companies, and the USA, Japan and other developed countries use their own national accounting standards, though the US Financial Accounting Standards Board and the IASB are working to harmonize their rules. The goal is to produce a single set of global accounting standards to improve the transparency and consistency of financial reports.

References in periodicals archive ?
The Financial Accounting Standards Board (FASB) is working with the IASB to converge their respective accounting standards into a robust set of rules that will meet the needs of preparers and users worldwide.
Editor's note: Following the interview with Sir David Tweedie in early February, on February 27, the IASB and FASB released a joint press release stating that they had published a Memorandum of Understanding (MOU) "that reaffirms the boards' shared objective of developing high-quality common accounting standards for use in the world's capital markets.
One way to get a single set of international accounting standards would be by fiat with governments and securities regulators mandating that either U.
The Financial Accounting Standards Board is considering possible changes to the proposed Fair Value Measurements Standard.
The IASB and the Financial Accounting Standards Board in the United States announced the "Norwalk Agreement" in October 2002, in which they declared a shared goal to achieve harmonization of standards.
The Toronto Valuation Accord group also continues to urge FASB to work more closely with The Appraisal Foundation, and in Canada for the Canadian Accounting Standards Board to work more closely with the Appraisal Institute of Canada, as well as continue to build their interaction with the International Accounting Standards Board and IVSC, to harmonize terminology and concepts applied in the multi-disciplinary requirements of professionals who will be crucial to implementing new standards.
In developing high-quality accounting standards, standard setters may opt for either FASB or IASB guidance.
Part of such a taming effort will likely be the joint CF project of the FASB and the International Accounting Standards Board (IASB).
Two years ago, the International Accounting Standards Board was a mere benchwarmer in the standards-setting game.
For the fourth consecutive year, the Financial Accounting Standards Advisory Council (FASAC) of the Financial Accounting Standards Board (FASB) was queried about top priorities for the coming year.

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