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Variances in application of GAAP

Does anyone have examples of variances in the application of GAAP. I have been asked to make a presentation and would like to include as many examples in as many diverse industries as possible. As an example, I worked for a retailer who changed their accounting for distribution expense. According to GAAP, it could be included with SG&A expenses or Cost of Goods Sold. We changed to be more comparable to our peer group and doing so changed our gross margin and SG&A as a percent of sales. I’m interested in other income statement, balance sheet and cash flow statement examples. Please identify the industry when you provide the example.


Topic Expert
Regis Quirin
Title: Director of Finance
Company: Gibney Anthony & Flaherty LLP
LinkedIn Profile
(Director of Finance, Gibney Anthony & Flaherty LLP) |

Are you only interested in how different industry standards dictate the use of GAAP, i.e. your example; or are you interested in the wiggle room within GAAP that allows for earnings management and fraud?

Phyllis Proffer
Title: Owner, Investor Relations Counselor
Company: The Heights Company, LLC
(Owner, Investor Relations Counselor, The Heights Company, LLC) |

I am interested in examples similar to the one I provided. I have no interest in "wiggle room" within GAAP. Perhaps the following will clarify. If you are comparing your SG&A expense as a percent of sales with one or more companies in your peer group, you need to be familiar with variances in what items each company includes in its SG&A expense shown on the income statement. If not familiar with all of the elements, you risk showing a more positive or negative comparison. The real reason may be composition while staying within GAAP. The same could be said about debt to total capital and many other ratios used to measure the financial health of an organization.

Kevin Roones
Title: Senior Accounting Professional
Company: In-between
(Senior Accounting Professional, In-between) |

If possible, you should try to put your hands on a copy of the AICPA's publication "U.S. GAAP Financial Statements - Best Practices in Presentation and Disclosure" (formerly Accounting Trends and Techniques). It provides many presentation examples and percentages of companies using various disclosure alternatives.


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