GAAP Governing Bodies

Securities Act of 1933

Referred to as the Truth in Securities Law Two basic objectives: ◦Requires that investors receive financial/significant information concerning securities offered for public sale ◦Prohibits deceit, misrepresentations, and fraud in the sale of securities

SEC

Securities and Exchange Commission Created by the Securities Act of 1933 and the Securities and Exchange Act of 1934. Holds the primary responsibility for Enforcing federal securities laws Regulating the securities industry Regulating the stock market and Preventing corporate abuse of investors

AICPA

American Institute of Certified Public Accountants (CPA) Sets ethical standards for the CPA profession Sets U.S. auditing and GAAP standards Develops and grades the Uniform CPA Examination

Securities Act of 1934

Empowers SEC to require periodic reporting by companies with publicly traded securities (GAAP) Empowers the SEC with broad authority over the securities industry Includes the power to register, regulate, and oversee ◦Brokerage firms ◦Transfer agents ◦Clearing agencies ◦Self-regulatory organizations

FASB

Financial Accounting Standards Board Established in 1973 Establishes and improves standards of financial accounting by non-governmental entities (GAAP)

What does GAAP mean?

Generally Accepted Accounting Principles

GAAP

Generally Accepted Accounting Principles Defined as the set of accepted industry rules, practices and guidelines for financial accounting Includes the standards, conventions, and rules accountants follow in recording and summarizing transactions, and in the preparation of financial statements.

GASB

Governmental Accounting Standards Board To establish and improve standards of state and local governmental accounting and financial reporting (GAAP)

Securities

Is a financial instrument issued by a business entity or government, which gives the buyer the right to either interest payments or a share of the earnings of the issuer.

Objectives of SEC

Maintains fair, orderly and efficient security markets Ensures that securities industry professionals deal fairly with their customers Ensures that corporations make all material information about themselves public Facilitates capital formation for corporations