Legal Definitions - ARB

An ARB, or Accounting Research Bulletin, refers to a series of authoritative pronouncements on accounting principles and practices issued by the Committee on Accounting Procedure (CAP) of the American Institute of Accountants (AIA) between 1939 and 1959. These bulletins were significant in the development of generally accepted accounting principles (GAAP) in the United States, providing guidance on how companies should record and report financial transactions. While many ARBs have since been superseded by later accounting standards, some of their foundational principles have been incorporated into current GAAP.

Here are some examples illustrating the application of Accounting Research Bulletins:

• Example 1: Historical Application in Business Operations

  Imagine a manufacturing company in the mid-1950s that needed to determine the appropriate method for valuing its inventory of raw materials and finished goods for its annual financial statements. To ensure their financial reporting was consistent with accepted practices of the time, the company's chief accountant would have consulted relevant Accounting Research Bulletins (ARBs) to understand the prevailing guidance on inventory valuation methods, such as LIFO or FIFO, and their proper application. This demonstrates how ARBs provided practical, contemporary guidance for businesses navigating complex accounting issues.

• Example 2: Researching the Evolution of Accounting Standards

  A financial accounting historian is researching the historical development of U.S. GAAP for a new academic paper. To trace the evolution of specific accounting treatments, such as the initial guidance on consolidated financial statements or the recognition of deferred income taxes, the historian would extensively reference various Accounting Research Bulletins (ARBs). This highlights the ARBs' role as foundational documents that shaped the progression of accounting standards before the establishment of the Accounting Principles Board (APB) and later the Financial Accounting Standards Board (FASB).

• Example 3: Legacy Impact on Modern Accounting Policies

  A large, long-established corporation is undergoing an audit, and the auditors are reviewing the company's historical accounting policies for certain fixed assets acquired decades ago. The auditors might discover that some of the company's long-standing depreciation policies, though updated over time, were originally established based on principles first outlined in an Accounting Research Bulletin (ARB). Even though the specific ARB has been superseded by newer FASB pronouncements, its influence on the initial policy setting demonstrates its lasting impact on the company's financial reporting practices and the historical continuity of GAAP.