Generally Accepted Accounting Principles Policy

Generally Accepted Accounting Principles Policy

Authority:
GASB Codification Section 1200
General Statutes 143-20.1 and 143B-426.39
GASB Statement No. 20, (paragraphs 1-6 and 8-33)

Effective Date:
7/1/95

References:
Refer to North Carolina Accounting System Policies, Federal and State Legal Compliance, for additional information related to legal compliance.Policy:

North Carolina General Statutes require that annual financial reports be prepared according to GAAP but the budget is prepared on the cash basis.. Where financial statements prepared in accordance with GAAP do not demonstrate finance-related legal and contractual compliance, the governmental unit should explain the difference in the CAFR. When conflicts between legal requirements and GAAP occur, the uniform NCAS maintains:

Accounts and prepares budgetary reports on the legally prescribed budgetary basis.

Sufficient supplemental records to permit presentation of financial statements in conformity with GAAP.

GAAP for the State of North Carolinas reporting entity are the official pronouncements of the accounting profession as applied to government. These pronouncements are primarily the statements and interpretations of the Governmental Accounting Standards Board (GASB), along with the pronouncements of the American Institute of Certified Public Accountants (AICPA) and the Financial Accounting Standards Board (FASB) made applicable to governments. In addition, older authoritative sources aid in defining governmental GAAP. FASBs, Accounting Research Bulletins (ARBs), and Accounting Principles Board (APB) Opinions issued on or before November 30, 1989, apply if they do not conflict with GASB pronouncements.

For questions on GAAP not specifically addressed in authoritative literature, the Office of the State Controller establishes a position after researching lesser authorative documentation and discussing the questions with experts in the field.

Additional Information:
GAAP are uniform minimum standards of and guidelines for financial accounting and reporting. They govern the form and content of the financial statements of an entity. GAAP encompass the conventions, rules and procedures necessary to define accepted accounting practice at a particular time. They include not only broad guidelines of general application, but also detailed practices and procedures.

Adherence to GAAP assures that financial reports of the primary government and all component units of the State reporting entity contain the same types of financial statements and disclosures, for the same categories, types of funds, and account groups, based on the same measurement and classification criteria.

A governmental accounting system must make it possible to:

Present fairly and with full disclosure the financial position and results of financial operations of the funds and account groups of the governmental unit in conformity with GAAP.

Determine and demonstrate compliance with finance-related legal and contractual provisions.

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