Who Creates Generally Accepted Accounting Principles GAAP?

Generally Accepted Accounting Principles (GAAP) is a set of rules and guidelines that accountants follow when preparing financial statements for businesses. But who creates these principles? The answer lies in the history of accounting standards in Canada.

Prior to 1968, the Research Committee of the Canadian Institute of Chartered Accountants (CICA) issued bulletins on financial disclosure, accounting principles, terminology, reporting, and auditing procedures. These bulletins were later consolidated into a major part of the CICA Handbook in 1968.

In 1973, the Accounting and Auditing Research Committee (AARC) was replaced by two new committees: the Accounting Research Committee (ARC) and the Auditing Standards Committee (ASC). The aim of these committees was to improve the quality of judgment exercised in both accounting and auditing and provide guidelines for communicating financial information and economic facts.

In 1982, the ARC's name was changed to the Accounting Standards Committee (ASC), and in 1991, it became known as the Accounting Standards Board (AcSB). The AcSB is responsible for setting and enforcing accounting standards in Canada. Since then, the Handbook has been constantly updated by including approved exposure drafts on various current topics.

In the early 2000s, the AcSB decided to converge Canadian GAAP with international GAAP, which led to the adoption of International Financial Reporting Standards (IFRS) by most entities that must follow AcSB standards. For publicly accountable enterprises, IFRS became mandatory in Canada for fiscal periods beginning after January 1, 2011.

In summary, the Accounting Standards Board (AcSB), formerly known as the Accounting Research Committee and the Auditing Standards Committee, is responsible for creating and enforcing Generally Accepted Accounting Principles (GAAP) in Canada. The AcSB has a long history of setting accounting standards, dating back to the early days of accounting research in Canada.

Who creates generally accepted accounting principles gaap