Disclosure of Departures From Opinions of Accounting Principles Board
To Members of the American Institute of Certified Public Accountants
The Council of the Institute, at its meeting October 2, 1964, unani-mously adopted recommendations that members should see to it that departures from Opinions of the Accounting Principles Board (as well as effective Accounting Research Bulletins issued by the former Com-mittee on Accounting Procedure) are disclosed, either in footnotes to financial statements or in the audit reports of members in their capacity as independent auditors.
This action applies to financial statements for fiscal years beginning after December 31, 1965.
The recommendations adopted by Council are as follows:
1. "Generally accepted accounting principles" are those principles which have substantial authoritative support.
2. Opinions of the Accounting Principles Board constitute "sub-stantial authoritative support."
3. "Substantial authoritative support" can exist for accounting prin-ciples that differ from Opinions of the Accounting Principles Board.
4. No distinction should be made between the Bulletins issued by the former Committee on Accounting Procedure on matters of account-ing principles and the Opinions of the Accounting Principles Board. Accordingly, references in this report to Opinions of the Accounting Principles Board also apply to the Accounting Research Bulletins.1,2
1This is in accord with the following resolution of the Accounting Principles Board at its first meeting on September 11, 1959:
"The Accounting Principles Board has the authority, as did the predecessor com-mittee, to review and revise any of these Bulletins (published by the predecessor committee) and it plans to take such action from time to time.
"Pending such action and in order to prevent any misunderstanding meanwhile as to the status of the existing accounting research and terminology bulletins, the Accounting Principles Board now makes public announcement that these bulletins should be considered as continuing in force with the same degree of authority as before."
2 The Terminology Bulletins are not within the purview of the Council's resolution nor of this report because they are not statements on accounting principles.