I: Introduction
Financial standard-setting bodies
The phrase "generally accepted accounting principles" (GAAP) is a technical accounting term that encompasses the conventions, rules, and procedures necessary to define accepted accounting practice at a particular time. Several bodies are involved in setting standards for financial accounting practice. The Financial Accounting Foundation (FAF) was incorporated to operate exclusively for charitable, educational, scientific, and literary purposes under Section 501(c)(3) of the Internal Revenue Code. It has oversight responsibility for the Financial Accounting Standards Board (FASB), Financial Accounting Standards Advisory Council (FASAC), Governmental Accounting Standards Board (GASB), and Governmental Accounting Standard Advisory Council (GASAC); selects members of both boards and both advisory councils; and provides funds for the boards. The FASB was formed in 1973 to establish standards of financial accounting and reporting for all entities other than state and local governmental entities, including private higher education institutions. The GASB was formed in 1984 to establish standards of financial accounting and reporting for all state and local governmental entities, including public higher education institutions. The Cost Accounting Standards Board (CASB) is the federal regulatory body charged with developing cost allocation procedures for all federal contracts.
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