GAAP and Sage Intacct
Sage Intacct is a GAAP-compliant system. Methods and principles adhere to GAAP standards, which is a set of principles followed by public companies in the United States.
About GAAP
Most businesses, nonprofits, and organizations working with the government adhere to Generally Accepted Accounting Principles (GAAP). GAAP is a standard set of rules used to ensure that financial statements are standardized and allows accurate comparisons across organizations.
It's based on standards and principles set by the standards organizations :
- Financial Accounting Foundation (FAF)
- Financial Accounting Standards Board (FASB)
- Governmental Accounting Standards Board (GASB)
GAAP Principles
There are 10 principles that form the basis of the GAAP (Generally Accepted Accounting Principles) standard. They are summarized in the following table.
| Principle of | Description |
|---|---|
|
Regularity |
The organization complies with GAAP rules and regulations as a standard. |
|
Consistency |
The same GAAP standards are used during the reporting process, preventing errors or discrepancies in reports. Changes or updates to the organization's methods are fully disclosed and the reasons explained. |
|
Sincerity |
The organization's financial situation is depicted accurately. |
|
Permanence of Methods |
The methods and procedures used in financial reporting are consistent. |
|
Non-Compensation |
Full financial information is shown, and no compensation, such as debt by an asset or revenue by an expense, is expected. |
|
Prudence |
Financial reporting shows the facts and reality of the information and does not obfuscate or cloud with speculation. |
|
Continuity |
After providing financial information, the information assumes that the business will not be interrupted and will continue to operate. |
|
Periodicity |
Accounting entries are distributed across the appropriate accounting periods, such as months, quarters, and so on. If entries span multiple periods, allocation is presented accordingly. |
|
Materiality / Good Faith |
Full relevant informational and value disclosure is made in financial reports. |
|
Utmost Good Faith |
When interacting with insurers, parties remain honest in transactions, and relevant details are disclosed before taking an insurance policy. |
Why Intacct adheres to GAAP standards
Sage Intacct adheres to GAAP standards. There are many reasons for this. Put simply, you should be GAAP compliant if you meet any of the following conditions:
- Have investors
- Are looking for funding
- Work with the government
- Are a nonprofit
- Are publicly traded
- Want a bank loan
- Make financial forecasts
- Are a global organization
- Plan to be any of these things
There are more reasons, but these are common ones.
As companies and organizations grow, the importance of standardized accounting principles grows with them, even when it's not a legal requirement. Intacct works to help you perform accounting tasks that comply with GAAP standards, to avoid pitfalls and errors.
Where to learn more
There are plenty of great resources on the internet. You can find information here:
