ABSTRACT
Generally accepted accounting principles (GAAP) are the minimum standards or rules organizations must follow in determining what financial information should be included in the general-purpose financial statements and how the information should be presented. The primary organizations responsible for setting accounting standards are the Governmental Accounting Standards Board (GASB), the Financial Accounting Standards Board (FASB), and the Federal Accounting Standards Advisory Board (FASAB). For state and local governments, GAAP is established primarily by the GASB, while the FASAB serves as the main standard-setting body for the federal government. All other entities, including nongovernmental not-for-profits, follow the guidance established by the FASB. Each organization bases the development of GAAP upon a foundation of financial accounting objectives or goals, taking into consideration the need for accountability to citizens. Examples of GAAP for state and local governments include fund accounting, modified accrual accounting, the reporting entity, and the financial reporting model.
