In last week’s BVWire, a quote from CFO magazine’s editor said that GAAP was thirty-five years old. But as Ken Becker, CPA (BVR’s former controller) points out, it is the FASB that’s entering middle-age, because APB Opinions pre-date the FASB, “and they had to have something to teach us when I was back in college!” (Ed Teach, articles editor for CFO, concurs that Becker is correct in aging the FASB, not GAAP, at 35.)
Moreover, referring to “Goodbye GAAP,” the CFO article also cited last week, “’Generally accepted accounting principles’ (or GAAP) are like laws that can vary among jurisdictions,” comments Mike Crain. So it’s more accurate to portray the current situation as U.S. GAAP vs. “international GAAP,” he says. While the FASB is now largely responsible for promulgating U.S. GAAP as Statements of Financial Accounting Standards, he says, its counterpart, the London-based International Accounting Standards Board (IASB) now generally promulgates “international GAAP” as the International Financial Reporting Standards. “Therefore, the SEC is not seeking to abandon GAAP as CFO states,” Crain concludes. “It is considering whether to require companies that are publicly registered in the U.S. to report under ‘international’ GAAP rather than U.S. GAAP.”
Not happily ever after. Thanks as always for the continued input from our informed subscribers. For a break from routine, check out this short, unhappy history of accounting standards.