Generally Accepted Accounting Principles, referred to as GAAP, are the body of accounting standards that govern financial reporting for United States businesses. In other words, these standards govern how companies prepare their financial statements, such as income statements, balance sheets, and statements of cash flow. These standards are established by the Financial Accounting Standards Board (FASB), which is a private sector organization, but are recognized as authoritative by the Securities and Exchange Commission (SEC).
The Securities and Exhange Commission has begun a process of studying a possible conversion toward International Financial Reporting Standards (IFRS), a set of accounting standards created by the International Accounting Standards Board (IASB). Whether, when, or how GAAP will be transitioned toward IFRS is still uncertain.