![]() Others use it more broadly to mean the compromise that results when the groups responsible for developing generally accepted accounting principles are pressured by interest groups such as the SEC, the American Accounting Association, businesses through their various organizations, Institute of Management Accountants, financial analysts, bankers, lawyers, and so on. Some use the term “politicization” in a narrow sense to mean the influence by governmental agencies, predominantly the Securities and Exchange Commission, on the development of generally accepted accounting principles. Some accountants have said that politicization in the development and acceptance of generally accepted accounting principles (i.e., rule-making) is taking place. User groups consist of those most interested in or affected by accounting rules. User groups are possibly the most potent force influencing the development of GAAP. Since the enactment of GAAP may affect many interests, much discussion occurs about who should develop GAAP and to whom it should apply. Groups, Organizations, And Regulatory Body That Shaped Generally Accepted Accounting Principles (GAAP) The GAAP has evolved based on these established concepts, standards, and best practices that are now “generally accepted” by companies, industries, central banks worldwide, financial institutions, and universities. ![]() Generally Accepted Accounting Principles began to be established with legislation such as the Securities Act of 1933 and the Securities Exchange Act of 1934. So the US federal government worked in collaboration with economic experts, with professional accounting groups, and other government agencies to establish financial reporting standards and practices that are consistent, accurate, and follow a legal framework. Many experts believed that the great depression resulted from some publicly-traded companies’ unregulated and non-standardized financial reporting practices. Generally Accepted Accounting Principles were eventually established in response to the 1929 Stock Market Crash and the Great Depression it caused. History of GAAP – How GAAP Was Formulated?
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