So, who makes the rules?
Generally Accepted Accounting Principles or
GAAP are established by the US Congress, but they're usually
too busy trying to do things like investigating steroids in baseball or
figuring out whether they should shut down the US government again.
They don't have time to do accounting standards, so
they delegate to the Securities and Exchange Commission.
But they're often too busy trying to catch the bad guys, so
they don't have time to make the rules.
So they delegate to the Financial Accounting Standards Board or
FASB which is a seven person board in Norwalk,
Connecticut which has the authority to make accounting rules in the US.
They're sometimes they're even too busy to make all the rules.
And so, there's an Emerging Issues Task Force and
the AICPA that can also have a hand in making accounting rules or US GAAP.
Now, this is just in the US.
Internationally, there are International Financial Reporting Standards or IFRS.
They are established by International Accounting Standards Board IASB, which
is based in Wharton and now acquired in over 100 countries including all the EU.
But as of now, US GAAP is still required for US firms.
So basically,
there are two big certificates of accounting standards in the world.
But the good news is for
almost all of the introductory accounting topics that we look in in this course,
there's a very high degree of overlap in the two standards.
>> Why doesn't the US just switch to IFRS?
Do you thing there will ever be one global accounting standard?