Generally Accepted Accounting Principles
What is GAAP?
GAAP is an acronym for Generally Accepted Accounting Principles. These principles constitute preferred accounting treatment.
Who sets GAAP?
Currently, the GAAP policies are set primarily by two entities:
- Financial Accounting Standards Board (FASB)
- American Institute of Certified Public Accounts (AICPA)
The main FASB pronouncements are known as SFAS's and the AICPA pronouncements are know as SOP's.
What is the hierarchy of these pronouncements?
Under GAAP, the FASB pronouncements (SFAS's) are the top-level guidance and take precedence over the AICPA pronouncements.
Does GAAP apply to non-profit organizations?
Yes, the SFAS's and SOP's typically apply to both for-profit and non-profit organizations. There are certain pronouncements that apply only to non-profits (i.e. SFAS 117) and certain that do not apply to non-profits. In addition, the newly created Public Company Accounting Oversight Board (PCAOB) has the authority to issue accounting regulations for publicly traded corporations.