Companies that do business with the federal government must follow generally accepted accounting principles (GAAP) when recording and reporting their accounting information. To assist with obtaining GAAP compliance, Diener & Associates offers outsourced accounting services that include the implementation of GAAP standards and other accounting best practices.
What Are Generally Accepted Accounting Principles?
Generally accepted accounting principles (GAAP) are a set of accounting principles, standards, and procedures issued by the Financial Accounting Standards Board (FASB). FASB uses GAAP as the foundation for its set of approved accounting methods and practices. GAAP has a set of ten key concepts for companies doing business with the government should follow for their financial recording and other accounting practices.
- Principle of regularity
- Principle of consistency
- Principle of sincerity
- Principle of permanence of methods
- Principle of non-compensation
- Principle of prudence
- Principle of continuity
- Principle of periodicity
- Principle of materiality
- Principle of utmost good faith
The goal of GAAP is to ensure that an organization produces reliable and accurate financial statements regarding government contracts.
How Can My Business Remain GAAP Compliant?
Remaining GAAP compliant involves following the principles defined by the FASB. In doing so, your business will likely require the assistance of professional internal accountants or an outsourced accounting firm such as our team at Diener & Associates.
Our team of CPAs will conduct a thorough analysis of your current bookkeeping and financial record processes to determine if there are any violations as it pertains to generally accepted accounting principles. We can then suggest necessary improvements and offer outsourced accounting services to save your business the time and effort associated with hiring internal professional accountants.
Why Is GAAP Important And Who Needs To Follow it?
Any business or independent contractor that is hired by the government to perform a service or sells goods to a government agency must follow the principles established by the FASB. GAAP is important for contractors as it is an essential component to working on most government contracts, as well as many non-government-related contracts. Following these principles allows your business to produce accurate and responsible financial records.
For government agencies and other institutions in charge of the procurement of contracts, ensuring that businesses follow generally accepted accounting principles allows them the ability to view and verify essential financial recordings related to the projects they provide.
The Risks Of Not Complying with GAAP
Without proper implementation of GAAP, your organization may be a less attractive candidate for future government contracts, regardless of your ability to complete the work outlined in the contracts. For existing contracts, you may run the risk of cancellation or an inability to maximize your profit margins if you cannot provide proof that your organization is utilizing GAAP.
Learn About Generally Accepted Accounting Principles For Compliance
The outsourced accounting team at Diener & Associates has extensive experience helping businesses comply with GAAP, allowing them to optimize their government contract procurement efforts. Give us a call at 703.386.7864 or schedule a consultation online today if you would like to speak with one of our qualified and professional CPAs about implementing GAAP for your organization.