Generally Accepted Accounting Principles.


The preparation of financial statements and accounts in accordance with the GAAP helps the capital markets to operate efficiently (Everingham,&nbsp.Kleynhans and&nbsp.Posthumus, 2007).

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Fidelity Investments Company is a well known mutual fund that offers portfolio of investments to their clients. The portfolio solutions are provided by the Fidelity Investments Company by selecting stocks of companies listed in the New York Stock Exchange as well as in other stock exchanges in the worldwide markets. For this, the company invests billions of dollars in various stocks listed in the well known stock exchanges. The investments in these companies by Fidelity Investment Company are done after analysis of the risk and return on investments by their analysts. Thus the Fidelity Investment Analysts undertake analysis of the financial statements of the companies listed in various stock exchanges including New York for formation of the investment portfolio. As the accounting standards in different countries are different and are influenced by a several factors like the capital market environment, financial reporting requirements, form of business ownerships, corporate culture, etc. it is important for the Fidelity Investment Analysts that the accounting and financial information presented in the consolidated statements of the chosen companies adhere to the accounting standards as mentioned in GAAP. The preparation of financial statements of companies according to GAAP and audited by independent and certified public accountants guarantees true and fair financial information of the companies that are comparable across all jurisdictions. This is important for the Fidelity Investment Analysts as they would able to compare the projected financials of the company in the international context and calculate the risk and return of the portfolio of investments in an accurate manner (Gibson, 2010).

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