Generally Accepted Accounting Principles (GAAP) are the standardized rules, procedures, and conventions governing financial accounting and reporting. GAAP ensures financial statements are prepared consistently, making them comparable across organizations and time periods. In Canada, public sector entities including municipalities follow Public Sector Accounting Standards (PSAS), which represent GAAP for governments. These standards address how to recognize revenues and expenses, value assets and liabilities, present financial statements, and disclose relevant information. Following GAAP isn't optional—auditors verify compliance, and departures must be disclosed and justified. GAAP evolves over time as the Public Sector Accounting Board issues new standards addressing emerging issues. Understanding that municipalities follow standardized accounting rules helps citizens trust that financial reports provide accurate, comparable information about how public money is managed.