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Advanced Auditing Dilfraz Singh, Lovely Professional University

Notes Unit 3: Introduction to US-GAAP

CONTENTS
Objectives
Introduction

3.1 Meaning and Definition of US GAAP
3.1.1 GAAP
3.1.2 U.S. GAAP

3.1.3 Necessity of GAAP
3.1.4 Basic objectives of US GAAP
3.1.5 Basic Assumptions of US GAAP
3.1.6 Organizations behind GAAP
3.2 Difference between IFRS and US GAAP

3.3 Role of US GAAP in India
3.4 Summary
3.5 Keywords

3.6 Review Questions
3.7 Further Readings

Objectives

After studying this unit, you will be able to:
 Explain the meaning and definition of US GAAP

 Understand the difference between IFRS and US GAAP
 Analyze the role of US GAAP in India

Introduction

Generally Accepted Accounting Principles refer to the standard framework of guidelines for
financial accounting used in any given jurisdiction; generally known as accounting standards or
Standard accounting practice. These include the standards, conventions, and rules that accountants
follow in recording and summarizing, and in the preparation of financial statements.
In the US, from 1938 to 1959 the Committee on Accounting Procedure (CAP), a committee of the
American Institute of Accountants (AIA) later known as (i.e., after it was renamed) the American
Institute of Certified Public Accountants (AICPA) assumed the task of setting standards. CAP
issued 51 Accounting Research Bulletins (ARBs) which dealt with specific accounting and
reporting problems. In 1959, the Accounting Principles Board (APB) replaced the CAP. The APB
operated from 1959 through 1973 and issued 31 Accounting Principles Board Opinions (APBOs),
various Interpretations, and four Statements. The Opinions also dealt with specific accounting
and reporting problems. Many ARBs and APBOs have not been superseded and still represent
authoritative GAAP. Criticism of the APB led to the creation of the Financial Accounting Standards

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