Accounting Principles Board (APB)

The Accounting Principles Board, usually abbreviated APB, was the body responsible for setting United States accounting standards from 1959 until 1973, when it was replaced by the Financial Accounting Standards Board. Its members served part-time, typically practicing partners at accounting firms or corporate executives, and the rules it issued were formally titled Opinions rather than Standards.

Operating under the sponsorship of the American Institute of Certified Public Accountants, the APB issued 31 Opinions over its roughly fourteen-year existence, tackling major accounting questions of the era including how to account for business combinations, how to report earnings per share, and how to handle income tax allocation. These Opinions became part of what is now called generally accepted accounting principles, and any APB Opinion not since superseded by a later FASB standard technically remains authoritative today.

The APB came under increasing criticism during the late 1960s and early 1970s for being too closely tied to the accounting profession itself, with its part-time, practitioner-dominated membership seen as vulnerable to influence from the very companies and auditors whose practices it was meant to regulate. A series of accounting scandals and controversial Opinions eroded confidence in the board, leading to the Wheat Study Group's 1972 recommendation that an independent, full-time board replace it — a recommendation that led directly to the creation of the FASB in 1973.

Before the APB existed, the Committee on Accounting Procedures issued similarly authoritative pronouncements called Accounting Research Bulletins between 1939 and 1959. The APB succeeded that committee, and was itself succeeded by the FASB, a fully independent, full-time board that remains the primary standard-setter for US GAAP today. This three-stage lineage — Committee on Accounting Procedures, then APB, then FASB — reflects a steady, century-long move toward a more independent and professionalized standard-setting process.

Because a handful of APB Opinions have never been formally superseded, accountants occasionally still cite them directly, and understanding the APB's place in the history of US standard-setting helps explain why GAAP today looks the way it does — a layered body of rules accumulated across three successive standard-setting bodies rather than written from scratch by any single one of them. The APB's troubled, politically pressured history is also a standard case study in accounting courses discussing why standard-setter independence matters, and it is frequently cited whenever a new generation of accountants debates whether today's standard-setters are sufficiently insulated from the industries and companies their rules govern.

A handful of APB Opinions remain touchstones in accounting education even though most have since been superseded in detail: Opinion No. 15 on earnings per share, Opinion No. 16 on accounting for business combinations, and Opinion No. 18 on the equity method for investments were all landmark efforts to bring consistency to areas of financial reporting that had previously been handled quite inconsistently from one company to the next. Studying how these Opinions were later refined by the FASB gives a useful window into how accounting standards mature over successive rounds of real-world application and feedback.