The Accounting Principles Board (APB) was the official organization that was part of the American Institute of Certified Public Accountants (AICPA) from 1959 to 1973. The APB was replaced by the Financial Accounting Standards Board (FASB).
The goal that was the purpose of APB was to establish guidelines and guidelines regarding accounting principles. Some of the decisions issued by the APB remain in force as an element of GAAP. Generally Accepted Accounting Principles ( GAAP) However, most were either modified or completely replaced through FASB statements.
Understanding the Accounting Principles Board
The APB played a significant role at the time, setting the foundations for GAAP which is the standard set of accounting guidelines and standards that aim to guarantee the consistency, transparency, and accuracy for U.S. corporate financial statements.
Nearly all public companies that are operating within the U.S. follow the GAAP standards, which makes it much easier to investors or auditors review accounts and comparisons of a company’s performance to that of other companies.
These standards were initially created by the APB that was charged with developing accounting standards and issuing pronouncements on accounting theories and practices. The APB’s membership was comprised of 18 to 21 accounting professionals executive executives from corporate companies, as well as academics. A majority vote of two-thirds of the members was required for the issue of an opinion.
The Beginning of the Year
Certain work in the field of accounting standards began in the 1930s as a response to the 1929 stock market crash , which was blamed, at a minimum, on accounting practices that were not reputable for corporations. It was the Securities Act of 1933 encouraged the use of better practices, but it did not do much to impose them.
The APB itself was a successor of the Committee on Accounting Procedure, an organization that initially attempted to develop and establish an established set of guidelines regarding financial reports. The committee was not deemed effective and eventually disbanded by the time the second half of World War II.
It was the APB published 31 views in its short time of existence, including guidelines for leasing accounting, taxation of income tax business combinations and intangibles, the issue of stock to employees as compensation and early repayment of debt. It also released opinions regarding disclosure of accounting policies as well as the reporting of interim financial data as well as the results of the discontinued operations.
It appears, however, that the APB could not keep up with the increasing complexity of transactions with financial reports.
FASB was created
It was replaced in beginning of the 1970s by FASB an independent, non-profit corporation governed by seven board members who are full-time.
The board gained a significant amount of respect in 1973, when Securities and Exchange Commission announced it would recognize the board’s guidelines and statements on financial reporting as being authoritative.
Nowadays, governments, agencies and non-profit organisations as also public companies generally follow GAAP standards. The most popular alternative is International Financial Reporting Standards (IFRS) that establishes the standard for every European Union nations and many other nations.