Accounting Regulatory Bodies:As more first-time investors turn to the markets to help pay for homes, send children to college, it is more important then ever to help protect the investors. In the past many unethical and greedy individual have fraudulently stolen billions of dollars from unknowing investors, who were tempted by promises of rags to riches most investors gave little thought to the risk that arose from the widespread abuse of marginal financing and unreliable information about the securities in which they were investing. With out agencies in place to maintain a standers in accounting companies could doctor reports in order to make the company seem profitable when they were not. Government regulation and regulatory bodies have been up into place to help protect investors.
Federal Accounting Standards Advisory Board (FASAB) was established in 1990 by the Secretary of the Treasury, the Director of the office of Management and Budget, and the Comptroller General of the United States as a federal advisory committee.
In 1999 the American Institute of Certified Public Accountants (AICPA) recognized the FASAB as the board that promulgates the generally accepted accounting principles (GAAP) for federal entities. (Federal Accounting Standards Advisory Board, 2008).
"The term "generally accepted accounting principles" has a specific meaning for accountants and auditors." Federal Accounting Standards Advisory Board, 2008). GAAP is the common set of accounting principles, standards and procedures that companies must use in order to compile their financial statements. GAAP are the combination of the commonly accepted ways of reporting and recording accounting information as well as the authoritative standards. GAAP helps to give investors a minimum level of consistency of companys' financial statements to use when analyzing for investment purposes. GAAP covers areas such as: revenue recognition, balance sheet item classification and outstanding share measurements. Companies are...