Generally Accepted Accounting Principles (GAAP) and General Accepted Recordkeeping Principle (GARP)
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Generally Accepted Accounting Principles (GAAP) and General Accepted Recordkeeping Principle (GARP) are frameworks that offer guidelines in Information Governance. This paper reflects the underlying similarities and differences that are fundamental in understanding these principles. GAAP are guidelines that applied in accounting specifically in the preparation of financial statements. GARP governs and manages information and ensures effective record keeping.
The Principles recognize the critical trademarks of information management and offer both a guideline of conduct for managing data and information to criticize that behavior. GAAP and GARP are principles used all over the world for proper record keeping and preparation of financial statements. The policies provide an assurance to the society and the community globally that any company is performing its tasks with reverence to information governance (Saffady, 2016).
Since the Principles define the crucial qualities of information management, they are incorporated into all companies’ sizes, whether public or private, and all organizations. The principles are self-governing from countries law and traditions, large organization or organization having branches in various countries can apply the principles to ensure consistent practices globally. An equal ground is created for benchmarking for organizations that use these standards (Morgan, Poole, Qiu, and Owen, 2018).
These principles allow easier retrieval of information when needed. GAAP ensures timeliness in decision making by providing necessary information to the accountant. GARP enables backup of the information on a daily bases while identifying and locating the needed records. GAAP and GARP are important for Managers and policymaking administrators in defining how to defend their companies in the use of assets and records (Smallwood, 2019). Lawmakers can craft regulations intended to offer certainty in business and community matters and to embrace organizations responsible for suitable values of conduct. Information governance specialists in scheming inclusive and actual information management programs. GAAP and GARP allow workers to perform their daily activities and duties by providing similar principles.
Generally Accepted Recordkeeping Principles and Generally Accepted Accounting Principles generate a framework of upright practice. Though they do not explore operation facts, such as different policy measures or specific skills, these principles make a complete image of actual information governance by providing a well-established governing body comprised of best practices and authorized requirements. Both GAAP and GARP uses accounting principles, where each entity is independent.
In GARP, duties are delegated to a senior executive officer to supervise the information governance application and responsibility to prepare records and manage data. In contrast, GAAP treats each entity as separate and independent from its owner. GAAP and GARP assume that business will not liquidate or wound up at any point in time hence utilizing the going concern concept.
Some differences exist between GARP, and GAAP, one of the common difference is in its application. GAAP are standards that guide the preparation of financial statements for auditing while GARP is used to set standards for record-keeping and its documentation. Erasing and deletion of any financial information in GAAP may lead to complete loss of data and incompatibility when it comes to auditing (Hughes, Larson, Sander, and Xiques, 2017). On the other hand, GARP deletes securely and stores other records in libraries and can be retrieved when needed. GAAP are policies that give guidelines on financial accounting only while GARP are standards that offer general information (Christensen and Nikolaev, 2017).
In some situations, it is challenging to apply GAAP due to the complexity, size, style, and capacity of organizations. In such cases, the organizations are forced to use their standards, while GARP can be used in all organization hence no restrictions
In the GAAP, liberalism principle is used whereby expenses and liabilities are overstated while revenues are understated such as bad debts are written off. In contrast, GARP documents recorded as they are regardless of whether they are expenses or incomes.
Reference
Christensen, H. B., & Nikolaev, V. V. (2017). Contracting on GAAP changes: large sample evidence. Journal of Accounting Research, 55(5), 1021-1050.
Hughes, S. B., Larson, R. K., Sander, J. F., & Xiques, G. (2017). Difficulties converging US GAAP and IFRS through joint projects: The case of business combinations. Advances in accounting, 39, 1-20.
Morgan, M. I., Poole, V. B., Qiu, H., & Owen, C. A. (2018). Introduce Non-GAAP Metrics to Business Students. Business Education Innovation Journal VOLUME 10 NUMBER 2 December 2018, 116.
Smallwood, R. F. (2019). Information Governance: Concepts, strategies, and best practices. John Wiley & Sons.
Saffady, F. A. I. (2016). The business case for records management. Information Management, 50(6), 49.