Generally Accepted Principles And Practices - GAPP
Categories: Accounting, Regulations
There are a lot of things that can motivate us to invest in one company instead of another, and not all of them are financial. If, for example, we’re all about saving the planet, we might choose to only invest in companies and funds that share our green values, regardless of the financial return. And that’s cool for us as individuals, because so what if our investments are motivated by our personal values or political ideology? It’s our money, right?
Right. But when it’s governments doing the investing, we tend to be a little less warm and fuzzy about politically-motivated investments.
If the goal of sovereign wealth funds (the fancy name for governments’ investment funds) is to maintain global financial stability, then we want those countries to act in the best interest of the economic sphere only. We don’t want their politics to get in the way and mess everything up.
Which is why the International Working Group of the Sovereign Wealth Funds (“IWG” to its friends) came up with GAPP. GAPP (a.k.a. “Generally Accepted Principles and Practices,” a.k.a. “the Santiago Principles”) is basically a list of guidelines to help its members stay out of those murky political investment waters. There are 24 specific guidelines, and they cover stuff ranging from having an independent auditing process to abiding by certain ethical practices. The idea is that government investments should be transparent, accountable, independent, and chock full of scruples.
The good news is that many of the world’s SWFs (that’s “Sovereign Wealth Funds,” not “single white females”) have signed onto GAPP. The maybe less-great news is that, since participation is voluntary, some nations have said “thanks, but no thanks” and continued to invest according to their own principles and practices.
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Finance: What is GAAP?21 Views
Finance allah shmoop what is a gap Yeah not this
Nor this Nor this gap is an accounting term that
stands for generally accepted accounting principles And it is basically
the accounting code of hammurabi or the ten commandments that
is There are lots and lots and lots of ways
that clever bean counters could define and or account for
the notion of profits lots of ways to recognize revenues
versus sales and lots of ways to think about how
much that ten commandment frisbee factory is appreciating in value
each year Well the world according to gaff outlines the
structure under which accountants must you know count beans the
basic idea Well sort of in the vein of the
golden rule that is do unto others as you'd have
them do unto you Gap requires that accountants always present
their numbers in the most reasonably conservative manner possible such
that they never overstate how profitable or how well the
company is doing Gap is the framework the map the
religion and the destinations we want to go inside this
neck of the accounting woods are three income statement cash
flow statement balance sheet will none of these three key
elements mean anything however unless they all follow the same
rules they're linked like gears in an overpriced swiss watch
and the eighteen zillion individual rules on their own mean
nothing like what is revenue Is it a dollar you
collect in cash at a video game arcade booth Is
it the promise to pay that dollar in a year
Well there are lots of ways to account for this
notion of revenue so don't think of gaff isa siri's
of rules rather think of it as this you know
key mathey kind of finance e a county religion it's
all about quote doing right unquote and part of that
issue is a natural conservatism that has to come with
it kind of amish you'd think would be a good
gap Accountants Well if you're thinking about how to account
for five dollars promised to you in a year well
you have to recognize that there is risk you won't
collect it and that money a year from now is
worth less than its face value and well that you
should categorise those revenues way off in the distance differently
from how you'd categorize collecting the five dollar bill in
cash that day and putting it in your cigar box
there right So gap is basically the force in accounting 00:02:26.44 --> [endTime] May it be with you