Search Our Website:
An article written by Washington, D.C., attorneys Joan L. Rood — counsel in Buchanan Ingersoll & Rooney's Tax Section - was published in the April 2010 edition of the Law Journal Newsletter's Franchising Business & Law Alert.

In the article, titled "Understanding GAAP," Rood discussed the ins and outs of GAAP — generally accepted accounting principles — which she explains is "a body of rules, principles, and practices that is not as well defined as many people think, despite the fact that the fortunes of a company, its managers, and its investors can rise and fall depending on how GAAP is applied to determine the company's financial results."

She goes on to advise that "[b]efore placing the above phrase in a contract, a lawyer should have at least a basic understanding of how that phrase may operate within the contractual terms."

She concludes the article explaining why GAAP matters to contracts. "The significant majority of GAAP clauses in contracts require that the financial statements of one or more of the contracting parties be prepared "in accordance with generally accepted accounting principles," she wrote.