15-2a U.S. GAAP

statements of Financial Accounting Standards (SFAS)

part of the highest level of generally accepted accounting principles (GAAP), issued by the Financial Accounting Standards Board (FASB) the Financial Accounting Standards Board (FASB), whereas in most other countries, there are equivalents to the FASB that develop accounting standards in those countries. In each country of the world, accounting practices have developed that relate to the culture and business environment of that country. Differences in culture and business environments have led to differences in GAAP among different countries. In the 1970s, a movement was started to create one set of GAAP that could be used in all countries. In the past decade, this movement has gained great momentum.

The FASB issues the Statements of Financial Accounting Standards (SFAS), which provide the procedures for dealing with specific accounting matters. Additional accounting guidance is provided in a number of places. Exhibit 15.3 lists the primary sources of authoritative accounting literature.

Determining the appropriate accounting treatment for a particular transaction or event is sometimes a complex process requiring careful research. This research process is carried out by the accounting information system. GAAP is constantly evolving. Consequently, financial accountants in the AIS must be careful to stay abreast of current developments. For example, when a new accounting standard changed how to translate foreign currency transactions, corporate accountants had to adopt the new standard. As a result, accountants in multinational corporations had to read and apply the new methodology.

Exhibit 15.3 AuTHoriTATive ACCounTinG liTerATure

Highest level of accounting authority:

1 Non-superseded sections of the Accounting Research Bulletins issued by the Committee on Accounting Procedures 2 Non-superseded sections of the APB Opinions issued by the Accounting Principles Board 3 Statements of Financial Accounting Standards issued by the FASB 4 Interpretations issued by the FASB 5 Statements and Interpretations of the Governmental Accounting Standards Board (for governmental units)

Next level of accounting authority:

1 AICPA Industry Accounting Guides 2 AICPA Statements of Position

3 FASB and GASB Technical Bulletins

4 Industry accounting practices 5 AICPA Accounting Interpretations

Lower level of accounting authority:

1 Guidelines published by SEC and other regulatory agencies 2 FASB and GASB Concept Statements 3 APB Statements

4 AICPA Issues Papers 5 Minutes of the FASB Emerging Issues Task Force 6 Other professional association statements 7 Accounting textbooks, reference books, and articles written by recognized authorities in the field

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