GAAP stands for Generally Accepted Accounting Principles. It is an set of rules and policies set forth primarily by the FASB (Financial Accounting Standards Board) under the direction of the SEC that defines accepted accounting practices and dictates how financial statements should be prepared and presented for companies doing business in the United States.
Our developers and designers spent numerous hours analyzing, discussing, and reviewing the GAAP policies as set forth in the Wiley GAAP book and followed those policies while designing and implementing the Integral Accounting Enterprise System. The GAAP Book can be purchased from Amazon by following this link: Wiley GAAP Book.
The basic point of GAAP compliancy in accounting software is to implement the proper accounting procedures into the software following the guidelines established by the conceptual framework and to have correct financial reporting.
Since GAAP is a set of policies and principles that act as guidelines for financial accounting, they need to be interpreted and applied to the specific situation and type of company for which the accounting is occurring. Therefore, a thorough understanding of the Conceptual Framework is helpful and recommended.
The Conceptual Framework is the foundation for the standards set forth in accounting and from which GAAP is written. The Conceptual Framework explains and addresses the concepts of financial accounting such as why orders don't post to the GL, or why invoices can't be edited under GAAP. It also sets forth the basic principles as to the way transactions are recorded, when to record income and expenses, etc. Understanding the conceptual framework will help you understand GAAP better and ensure that when you customize and modify the software, it remains GAAP compliant. Chapter One in the Wiley GAAP Book details the history of GAAP, researching GAAP issues, and the Conceptual Framework.
There is no clear-cut checklist that details GAAP compliancy. In the back of the Wiley GAAP book, there is a Disclosure Checklist that sums up the policies and procedures for a company following GAAP. The checklist is rather large, and complex, covering concepts of accounting on a reporting and procedural level, rather then specific to accounting software. It is a good basis though, since it does detail certain things that should exist and occur (such as requirements that need to be on the financial statements) in an accounting system and is something that should be kept in mind when customizing Integral Accounting Enterprise.