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Accounting Principles And Ethics

Accounting Principals and Ethics
“The Federal Accounting Standards Advisory Board (FASAB) is the body that establishes accounting principals for federal entities” (FASAB, 2007). There is a hierarchy which lists the sequence of sources and their priority that an individual should look to for guidance with concern to accounting and reporting queries. This is called the General Accepted Accounting Principals hierarchy. This hierarchy is broken down into four categories as follows:
“Category (a), officially established accounting principals, consists of Federal Accounting Standards Advisory Board (FASAB) Statements and Interpretations, as well as AICPA and FASB pronouncements made applicable to federal government entities by FASAB Statements of Interpretations” (FASAB, 2007). AICPA stands for the American Institute of Certified Public Accountants.
Category (b) is comprised of technical bulletins (TBs) from FASAB. There are also some audit and accounting guides that are specific to federal government entities as well as the AICPA Statements of Position.
Category (c) contains some practice bulletins from the AICPA which are made applicable to federal government entities and are cleared by the FASAB.
“Category (d) includes implementation guides published by the FASAB staff, as well as practices that are widely recognized and prevalent in the federal government.
The GAAP were created to keep the information that is required by so many third parties requiring guidance about accounting principals free from bias and inconsistencies. Organizations that use GAAP when creating their reports are the ones who have consistent habits with concern to the data displays. As a result of this, it is easier to locate what is needed and more difficult to be tricked by a company and they will not be able to misrepresent the figures. GAAP covers several different aspects of financial reporting which can give companies a stencil to follow and make reading and understanding these...