FASB-What triggers this to be required?

[Guest erepper]

I Know self employed business structures (sole props, partnerships LLCs) dont. Are all c and s corps required?

[MGB]

It all depends on whether the entity is required to produce audited financial statements that follow generally accepted accounting principles (GAAP). The formation of the organization is irrelevant, even a sole proprietor could be subject to GAAP if they borrow money.

Any corporation that issues public stock or debt must follow GAAP in its filings with the SEC. Other companies that borrow money or in some other way have others involved with financial interests of the organization (e.g., a joint venture) will often be required to produce GAAP statements to the lending organization.

The term "audited financial statement" means an auditor has reviewed the financial statement and agrees that it has been completed following GAAP. GAAP requires that all pronouncements by the FASB have been followed.

Many corporations do not follow GAAP because they are privately owned and do not borrow money.

Also, if an insurance company does not issue stock (i.e., a mutual company), they will not follow GAAP, but do have to follow statutory accounting principles, which are similar to GAAP for pensions.

[GBurns]

Basically FASB sets the standards for use of GAAP guidelines. I suggest that you do a Google search on "GAAP" and also look at the FASB website etc:

http://www.fasb.org/facts/index.shtml

There are many Partnerships and LLCs that have to use these and so I would expect that there are sole proprietorships and could be a SE or 2 that also have to. The requirement has nothing to do with entity structure as far as I can remember.

[david rigby]

I make it a point to agree with MGB, especially when he is right, as now. Similar discussion.

http://benefitslink.com/boards/index.php?showtopic=19190

[AndyH]

Agreed but I also Georgie did a pretty good job answering the question as well.