Legal Definitions - Accounting Research Bulletin

An Accounting Research Bulletin (ARB) was a type of official publication issued by the American Institute of Certified Public Accountants (AICPA). These bulletins contained recommended accounting practices and principles that were considered authoritative guidance for accountants and businesses during their time. They served as important benchmarks for how financial transactions should be recorded and reported before the establishment of more comprehensive accounting standards by later bodies.

Here are a few examples of how Accounting Research Bulletins applied:

• Historical Reporting Guidance: Imagine a manufacturing company in the 1950s trying to determine the best way to account for its inventory. They would consult an Accounting Research Bulletin, which might have provided specific recommendations on inventory valuation methods, such as LIFO or FIFO, helping them ensure their financial statements were prepared according to accepted practices of the era.

  This example illustrates how an ARB provided practical, specific guidance for businesses on how to handle particular accounting challenges, ensuring consistency in financial reporting during its period of influence.

• Auditing Historical Records: A modern auditor is tasked with reviewing the financial records of a company that existed in the 1960s, perhaps for a historical acquisition or a legal dispute. To properly assess whether those past financial statements were prepared accurately and fairly, the auditor would need to refer to the relevant Accounting Research Bulletins that were in effect at that time. This ensures they are evaluating the statements against the standards applicable when they were created, not current ones.

  This demonstrates an ARB's role as a historical benchmark for evaluating the accuracy and compliance of past financial statements, crucial for historical audits or legal reviews.

• Academic Study and Evolution of Standards: A university student researching the development of generally accepted accounting principles (GAAP) in the United States might study various Accounting Research Bulletins. By examining these historical documents, the student could trace how specific accounting concepts, like the treatment of depreciation or consolidated financial statements, evolved over time, eventually leading to the more structured standards we have today.

  This highlights an ARB's significance as a historical document for understanding the progression and evolution of accounting thought and standards, serving as a foundational step in the development of modern accounting principles.