1. GAAP PowerPoint #1

2.  Generally Accepted Accounting Principles  Defined as the set of accepted industry rules, practices and guidelines for financial accounting  Includes the standards, conventions, and rules accountants follow in recording and summarizing transactions, and in the preparation of financial statements

3.  AICPA  FASB  SEC ◦ Define: Security ◦ Securities Act of 1933 ◦ Securities Act of 1934  GASB

4.  American Institute of Certified Public Accountants (CPA)  Founded in 1887  Sets ethical standards for the CPA profession  Sets U.S. auditing and GAAP standards  Develops and grades the Uniform CPA Examination  http://www.aicpa.org http://www.aicpa.org

5.  Financial Accounting Standards Board  Established in 1973  Establishes and improves standards of financial accounting by non- governmental entities (GAAP)  www.fasb.org www.fasb.org

6.  Securities and Exchange Commission  Created by the Securities Act of 1933 and the Securities and Exchange Act of 1934  Holds the primary responsibility for: ◦ Enforcing federal securities laws ◦ Regulating the securities industry ◦ Regulating the stock market and ◦ Preventing corporate abuse of investors

7.  Enforcement authority granted by Congress  Bring civil enforcement actions against individuals and companies who: ◦ Commit accounting fraud ◦ Provide false information ◦ Engage in insider trading ◦ Violate securities laws  Bring criminal enforcement actions to prosecute individuals and companies for criminal offenses

8.  Maintains fair, orderly and efficient security markets  Ensures that securities industry professionals deal fairly with their customers  Ensures that corporations make all material information about themselves public  Facilitates capital formation for corporations  www.sec.gov www.sec.gov

9.  notes  stock  treasury stock  security future  bond  debenture  certificate of interest  participation in any profit-sharing agreement

10.  Referred to as the Truth in Securities Law  Two basic objectives: ◦ Requires that investors receive financial/significant information concerning securities offered for public sale ◦ Prohibits deceit, misrepresentations, and fraud in the sale of securities

11.  Empowers the SEC with broad authority over the securities industry  Includes the power to register, regulate, and oversee ◦ Brokerage firms ◦ Transfer agents ◦ Clearing agencies ◦ Self-regulatory organizations  New York Stock Exchange  American Stock Exchange  NASDAQ  Empowers SEC to require periodic reporting by companies with publicly traded securities (GAAP)

12.  Governmental Accounting Standards Board  Established in 1984  To establish and improve standards of state and local governmental accounting and financial reporting (GAAP)  www.gasb.org www.gasb.org

13.  What is meant by GAAP?  Why should all companies follow GAAP in reporting to external users of financial information?  Explain the roles of each of the governing bodies in the setting of accounting standards.