Question

4. in your own words, discuss the evolution of the three private sector accenting standard setting organizations: a. AICPA’s Committee on Accounting Procedure (CAP) b. AICPA’s Accounting Principles Board (APB). c. Financial Accounting Standards Board (FASB)

Answer 1

American Institute of Certified Public Accountant is national body of Certified Public Accountant (CPA) which aims to transform the CPA profession rapidly changing business environment and it provides the license to public accountant for practicing as Certified Accountant by applying skills and competency. National Association of State Boards of Accountancy (NASBA) and AICPA both are doing efforts for the evolution of CPA.

Further, Accounting Principles Board (APB) was also formed by AICPA in 1959 for issuing guidelines and principles for preparation and presentation of financial statements. APB is the first body to provide the foundation of Generally Accepted Accounting Principles.

Finally, Financial Accounting Standard Board (FASB) is issued in 1973 to replace the Accounting Principle Board. Generally Accepted Accounting Principles (GAAPs) refers to standards issued by Financial Accounting Standard Board (FASB) for preparation and presentation of financial statements of any organisation. There are guidelines and principles in GAAPs relating to preparation and presentation and to disclose it to public of financial statements issued by FASB like Principles of Consistency, Regularity, Continuity, Materiality etc. These principles are needed to be followed by corporation in preparation & presentation of financial statements