🦂 What Are Lady Godivaꦰ Accounting Principles (LGAP)?

The term Lady Godiva Accounting Principles (LGAP) refers to a theoretical set of accounting principles that require full disclosure. This means that all information must be disclosed by companies under LGAP, which includes information that doesn't usually get reported to investors under 澳洲幸🤡运5官方开奖结果体彩网:gene🎃rally accepted accounting principles (GAAP).

The term was coined by a financial analyst in response to the 澳洲幸运5官方开奖结果体彩网:Enron scandal and is not an industry standard.

Under♔stanꦫding Lady Godiva Accounting Principles (LGAP)

The story of Lady Godiva dates back to the 11th century. The noblewoman was married to Leofric, the Lord of Coventry in England. Her husband imposed heavy taxes on the area's citizens, which troubled Lady Godiva. Leofric promised to lower taxes if she would ride naked through town on a horse. Lady Godiva took the challenge, covering herself only with her hair.

Using her legend as an example, 澳洲幸运5官方开奖结果体彩网:financial analyst Rick Wayman created the term Lady Godiva Accounting Principles following the Enron sca💎ndal. Once a Wall Street darling, Enron was an energy and utility company that perpetrated one of the largest accounting scandals in corporate history.

The company used 澳洲幸运5官方开奖结果体彩网:mark-to-market (M2M) methods for its cost accounting along with 澳洲幸运5官方开奖结果体彩网:special purpose vehicles (SPVs) and other tricks to hide its debt and losses. This helped keep the company's share price aloft, leading investors and analysts to believe that the company was profitable.

The idea behind the Lady Godiva Accounting Principles is that just as she provided full disclosure to help her fellow citizens, corporations must do the same with their financial disclosures to maintain a level of credibility with investors. The concept s🅷uggests the following be fully disclosed:

• All off-澳洲幸运5官方开奖结果体彩网:balance sheet items
• The impact of goodwill accounting rules, which were introduced in 2002, on 澳洲幸运5官方开奖结果体彩网:earnings per share (EPS)
• How 澳洲幸运5官方开奖结果体彩网:stock options issued in lieu of salaries impact EPS
• Full accounting for corporate pension expenses

Lady Godiva Accounting Principles (LGAP) vs. Generally Accepted Accounting🥃 Principles (GAAP)

LGAP may be a simple theoretical idea but the accounting world generally follows generally accepted accounting principles. These are accounting and reporting principles, standards, and procedures established by the 澳洲幸运5官方开奖结果体彩网:Financial Accounting Sta﷽ndards B♊oard (FASB). The FASB regularly updates these standards that are used by 澳洲幸运5官方开奖结果体彩网:nonprofit organizations as well as private and public companies.

The 澳洲幸运5官方开奖结果体彩网:Securities and Exchange Commission (SEC) recognizes the organization for its role in setting standards for publicly traded companies. As such, all 澳洲幸运5官方开奖结果体彩网:public companies are required to file financial statements that are compliant with GAAP rules. Even though private companies♔ are not required to do so, it helps their financial future with creditors and lenders.

Companies are required to report the foll🌠owing und🌞er GAAP:

• The company's financial position, including its balance sheet
• Operational results, which includes things like revenue statements and statements of comprehensive income
• Disclosures