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John Boudreau
In finance and accounting, “practice standards” (like GAAP) serve a different purpose from “decision standards” like those for financial reporting, with very different requirements.
Independent auditors opine as to whether the companies’ financial statements “present fairly, in all material respects, an entity’s financial position, results of operations, and cash flows in conformity with generally accepted accounting principles,” according to the Public Company Accounting Oversight Board.
A FASB Statement of Accounting Concepts (No. 8, September 2010, page 1, section OB2) defines financial reporting standards a bit differently: “The objective of general purpose financial reporting is to provide financial information about the reporting entity that is useful to existing and potential investors, lenders, and other creditors in making decisions about providing resources to the entity.”
