Generally Accepted Accounting Principles, or GAAP, are
the accounting principles, standards, and procedures employed by companies in
recording their financial statements (“Comprehensive guide…”,
2018). This principle is used to make sure that investors keep a consistent
level of financial statements when trying to figure out which company to invest.
The GAAP includes revenue identification, balance sheet entry classification,
and outstanding share identification (“Development of GAAP”3, 2018). When recording
their financial statements, U.S. law requires that all companies release their financial
statements to the public and also to different companies that are publicly
traded on stock exchanges.

Fidelity Investments Company is a well-known mutual fund investment company. The
Fidelity Investment Company makes great amounts of investments, that are worth
billions, in companies that have been listed in the stock markets (“Financial Accounting
Foundation”, 2018). GAAP are very important for Fidelity’s investment analysts.
The Fidelity investment analysts find financial statements that have been prepared
in accordance with GAAP and audited by an independent Certified Public
Accountant (CPA) useful (“Comprehensive guide…”, 2018). It is useful to them
because of its accuracy. These financial statements are prepared by the management
and checked by the CPA. The CPA are honest and trustworthy. They have no reason
to lie since they will not gain anything from it. When the financial statements
are prepared in accordance with GAAP, it is guaranteed that all of the rules
are followed and that they are correct.

are several organizations that influence GAAP, which include the Financial
Accounting Standards Board (FASB), the American Institute of Certified Public
Accountants (AICPA), the Securities and Exchange Commission (SEC), the Government
Accounting Standards Board (GASB), the Public Company Accounting Oversight
Board (PCAOB), the International Accounting Standards Board (IASB), and the
Internal Revenue Service (IRS) (“Essentials of GAAP…”, 2017).
The Financial Accounting Standards Board (FASB) is the main organization
that is responsible for making rules that need to be followed to be employed in
accounting practice. The American Institute of Certified Public Accountants
(AICPA) is a professional association of the certified public accountant. It
influences the accounting field through the acts of its senior technical
committee. The Security and Exchange Commission (SEC) is the federal government
agency with the authority to carry out accounting practices. These accounting practices
are carried out on the companies and businesses that provide their securities
to the public. This is very important and has a great influence on the
accounting practice, because without it these practices would not be about to
be perpetrated. The Governmental Accounting Standards Board (GASB) is an
organization that provides accounting standards to the state, and also the
local governments (Wilkinson, 2017). The Public Company Accounting Oversight
Board (PCAOB) is a government body that was created by the Sarbanes-Oxley Act. This
organization registers public accounting firms and determines the standards
that should be followed by company auditors. It conducts inspections,
investigations, and disciplinary proceedings of registered accounting firms if
standards are not followed. The International Accounting Standards Board (IASB)
is an organization that approves the international accounting standards. Lastly,
the Internal Revenue Service (IRS) is the body that administers the tax law
rules, which is very helpful and important with the accounting practice (“Essentials
of GAAP…”, 2017). 

Written by

I'm Colleen!

Would you like to get a custom essay? How about receiving a customized one?

Check it out