hire us gaap accounting experts

hire us gaap accounting experts

The Role of GAAP Accounting Experts in Ensuring Financial Transparency and Compliance

1. Introduction to GAAP Accounting

In 1931, the American Institute of Certified Public Accountants charged the Committee on Accounting Procedure with the task of setting accounting principles and rules. Prior to this, accounting submerged from the absence of understood criteria with the result that no two organizations utilized the same procedures for the same issues. The report of the committee laid down the basis of GAAP as paramount in its time of evaluation. Maintaining GAAP is necessary for adherence to the principles of neutrality, reliability, and relevance of accounting information. Compliance with GAAP allows for a better comparison and verification of financial reporting. This relevance and reliability allow it to be verified and capitalized by users of financial accounting.

Globalization has decreed the proliferation of cross-border trade and investment. One result of this has been the recognition of Non Generally Accepted Accounting Principles, however, this has not gained the acceptance that other international requirements have. The necessity of globally recognized financial reporting has boomeranged into the discussion of IFRS which is a set of accounting principles that have been internationalized for the purpose of providing internationally sound global accounting principles. The U.S. Securities and Exchange Commission has performed a study of whether the U.S. should adopt IFRS or not. The commission has recommended not to because IFRS lack sufficient breadth and application. It will take much time and low benefits to converge in the future. The International Accounting Standards Board plans to implement IFRS in the future which may be more universal than GAAP. Therein lies the threat. The potential who live in an accounting environment that could be devoid of openness, rigor, and accountability.

2. The Importance of GAAP Compliance

The primary role of accountants who are certified in and compliant with Generally Accepted Accounting Principles (GAAP) is to help ensure that financial transactions are accounted for in a consistent, verifiable manner. Accountants who prepare reports based on recognized and valued accounting principles reduce the level of mistrust in financial statements required and used by a wide range of parties. These parties include financial statement users who rely on or publish reports based on U.S. GAAP, such as the U.S. Securities and Exchange Commission; tax reporting entities, including federal, state and local governments; and other regulatory agencies with oversight responsibility in areas as diverse as consumer protection and worker safety. Failure to prepare financial statements that comply with GAAP can result in rejection or revision of financial reports, delays in acquisitions or disposals, disclosure of improprieties and legal fees, penalties, settlements, income loss, and restatements.

The importance of financial transparency is demonstrated by the reliance that a broad spectrum of users of financial statement reports place on these statements. Whether performing due diligence, evaluating solvency, or investigating potential malfeasance, all stakeholders must be able to trust financial reports containing underlying GAAP-compliant financial transactions. Fundamental accounting notions, such as the use of time-value-of-money concepts, such as amortization interest rates and fair values, also come into play in recognition and classification decisions. The underlying principles that help to define when sales can be reported, investments can be capitalized, and work on contracts (including satisfaction of warranties and the availability of third-party guarantees) can be included as foreign markets are also species of accounting judgments. In the absence of principles established by an authoritative independent body, GAAP, these accounting decisions affecting enterprise valuation could vary dramatically based on the skills and perspectives of the accountants making those judgments.

3. Key Responsibilities of GAAP Accounting Experts

Some of the key responsibilities of GAAP experts include: creating, developing, and implementing financial management strategies and procedures. Companies require expert level help or advice, which the GAAP accountant provides. They specialize in the strategic planning process, tax laws, and general financial procedures, including accounting for mergers and acquisitions, consolidations, debt and equity offerings, and derivative instrument and hedging activities. They provide specialized guidance while assuring compliance with GAAP/SEC requirements.

Draft of Regulatory Filing: GAAP requires specific content in the regulatory filings and reports. The GAAP accountant is responsible for drafting or reviewing the accompanying news releases.

Monitoring Developments: The GAAP accounting expert closely monitors the SEC, FASB, IASB, and AICPA that impact public filers and provides any relevant technical updates on their applications of U.S. GAAP or IFRS.

GAAP expertise is oftentimes required in a consulting or advisory capacity, and the role may also extend beyond current and future regulatory and industry developments. They may interact with all levels in an organization or individual engagement, sometimes in consultation with tax or legal accountants as well as management under attorney-client privilege. They may undergo examination or involvement of workpapers as work is performed by internal and external audit teams. There are various technical areas required for a seasoned or knowledgeable well-versed GAAP accountant to assume these responsibilities. Some industries which involve expertise in U.S. GAAP and IFRS accountant subjects include oil and gas, financial institutions, retail & consumer, manufacturing, and technology. Duties include participation in teams and other related corporate functions, including commercial project management teams, treasury, financial planning analysis personnel, etc.

4. Challenges and Best Practices in GAAP Accounting

General accepted accounting principles (GAAP) accounting has many nuances that pose challenges to many accountants and accounting departments. In this section of our guide to GAAP accounting experts, we highlight the challenging nuances as well as best practices in addressing these GAAP nuances. Practicing these best practices will contribute towards stronger internal controls and financial transparency.

Individuals tend to have different rules that they follow in their jobs. These idiosyncratic job “rules of thumb” lead to differences in how work is done and create variations from perfect practice. As indicated in this study, these idiosyncratic rules vary both because different individuals have different performance measures and because of intrinsic differences.

Interview data, which provided more depth than the survey responses, demonstrated consensus on the best approach for nearly all of the 12 topics under investigation. Participants identified interview data as among the most effective means for highlighting best practices. Interview data offer the potential for discovering approaches that had not previously come to light because of the infrequency or complexity of specific accounting processes. Interview data also make it easier to describe the contexts in which general practices are more or less appropriate.

All participants were delighted with the audit evidence provided by the interview data, which they blamed primarily on their familiarity with technical facts and reporting requirements. They felt that existing research has focused on general problems or that reported solutions are “motherhood and apple pie” that generally do not reflect actual practice.

5. The Future of GAAP Accounting and Emerging Trends

It is often profitable to predict future trends, so here are six predictions about GAAP accounting that may excite you and others who value the importance and relevance of GAAP accounting.

As noted in Chapter 2, GAAP accounting will probably remain a key part of the financial system for the foreseeable future as financial stakeholders – primarily investors, creditors, and the taxman – demand the reliability, comparability, and relevancy of GAAP accounting information. Some of the ever-increasing and newer accounting and auditing standards issued by the Financial Accounting Standards Board (FASB) and the Public Company Accounting Oversight Board primarily reflect the global reinvigoration of economic activity and exuberance, rapidly changing business models, and new equity financing opportunities – all occurring in an increasingly digitized world economy.

As more than 100 countries converge or harmonize their financial reporting standards with International Financial Reporting Standards (IFRS), the ideal of a single set of high-quality international accounting standards will groan under its own weight. What may emerge is an Americanized version of IFRS for globally integrated U.S. multinational companies and Continental GAAP adjustments to legacy accounting systems. Aware of criticism that GAAP seems to pay more attention to fair values instead of the experiences of operating companies that actually generate cash and wealth, the accounting standard-setting process will incorporate more industry expertise and firm analysts in its empirical justification of accounting model selection and parameterization. In that regard, U.S. GAAP standards may become too inward focused as an exasperated FASB narrows its constituency to focus on largely U.S. capital market interests.