Financial Accounting Foundation (FAF) – This organization was formed in 1972 as the administrative corporation that oversees the Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB) .
The FAF is responsible for appointing board members and ensuring that these boards operate in a fair and transparent manner.
Beyond the 10 principles, GAAP compliance is built on three rules that eliminate misleading accounting and financial reporting practices.
These rules create consistent accounting and reporting standards, which provide prospective and existing investors with reliable methods of evaluating an organization's financial standing.
FASB is responsible for the Accounting Standards Codification, a centralized resource where accountants can find all current GAAP.
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The GASB was established in 1984 as a policy board charged with creating GAAP for state and local government organizations.Without these rules, accountants could use misleading methods to paint a deceptive picture of a company or organization's financial standing.Without regulatory standards, companies would be free to present financial information in whichever format best suits their needs.Because GAAP standards deliver transparency and continuity, they enable investors and stakeholders to make sound, evidence-based decisions.The consistency of GAAP compliance also allows companies to more easily evaluate strategic business options.For example, goodwill and interest rate swap standards are among several recent changes to provide alternatives for private companies.Below, we have created an overview of the boards that oversee GAAP pronouncements.The table below represents the total revenues, net income, and diluted earnings per share for the 20 fiscal years of Pegasystems Incorporated.“Total revenues” refers to the total value of all goods and services sold by the company.With carte blanche to portray a company's fiscal standing in the most ideal light, investors could be easily misled.The Great Depression in 1929, a financial catastrophe which caused years of hardship for millions of Americans, was primarily attributed to faulty and manipulative reporting practices among businesses.