keyHRinfo.com offers innovative HR and Payroll services for startups from reviewing the needs, to the solution proposal, implementation and operational phases. Also ongoing assistance for operational, audit and M&A.
The Evolution of US GAAP: Early Beginnings and Development
The evolution of U.S. Generally Accepted Accounting Principles (GAAP) began in the early 20th century, driven by the need for standardized accounting practices amid rapid economic growth and corporate expansion. Initially, accounting practices in the United States were diverse and lacked consistency, prompting the formation of the American Institute of Accountants (now the American Institute of Certified Public Accountants, or AICPA) in 1887, which began issuing guidance on accounting standards. However, it wasn't until the Great Depression and the subsequent stock market crash of 1929 that the need for more rigorous and uniform accounting standards became apparent. The U.S. government established the Securities and Exchange Commission (SEC) in 1934, which was granted authority to regulate financial reporting for publicly traded companies. This led to the AICPA forming the Committee on Accounting Procedure (CAP) in 1939, which began issuing formal accounting bulletins, marking the early steps in the development of GAAP.
Modernization and the Role of FASBT
he process of standardizing U.S. GAAP continued to evolve significantly in the latter half of the 20th century and into the 21st century. In 1959, the AICPA replaced CAP with the Accounting Principles Board (APB), but due to criticisms of the APB’s slow response to emerging accounting issues, the Financial Accounting Standards Board (FASB) was established in 1973 as an independent, private-sector organization. The FASB became the primary body responsible for developing and issuing GAAP in the United States, creating a comprehensive framework to improve transparency, consistency, and comparability in financial reporting. Over the years, U.S. GAAP has continued to evolve, incorporating more sophisticated rules and guidelines in response to complex financial markets, globalization, technological advancements, and corporate scandals, such as the Enron collapse in 2001, which led to further reforms like the Sarbanes-Oxley Act of 2002. Today, U.S. GAAP is considered one of the most comprehensive and robust sets of accounting standards in the world, continually adapting to address new financial reporting challenges.
I hope that this infographic helped you better understand the evolution of US GAAP standards.
keyHRinfo.com offers innovative HR and Payroll services for startups from reviewing the needs, to the solution proposal, implementation and operational phases. Also ongoing assistance for operational, audit and Mergers and Acquisitions.
keyHRinfo.com Contact: viola.pokhe@keyhrinfo.com
Comments