Trump, fraud, and minding the GAAP: A guide to the accounting rules at the heart of his NY trial, courtesy of 2 standup comics who happen to be CPAs
- Trump's $250M fraud trial hinges on whether he followed generally accepted accounting principles.
- In an effort to keep our readers awake, we asked 2 accountant-comedians to help tame the wonkiness.
Trying to follow the Trump Organization civil fraud trial but don't understand all the quacking about "GAAP, GAAP, GAAP" — those wonky, "generally accepted accounting principles" at the heart of the trial?
Don't feel bad: You're not alone. Even lead defendants Donald Trump and his eldest son, Donald Trump, Jr., struggle to explain GAAP, with the elder Trump dodging responsibility and the younger shrugging that they are, well, "generally accepted."
GAAP, however, is the fulcrum of the case.
Trump and his family insist they followed GAAP in their net-worth statements to banks, insurers, and tax officials. New York Attorney General Letitia James insists they most certainly did not, to the tune of up to $3.6 billion in exaggerations a year.
So to lead you, fair reader, safely into the tedious center of an already tedious trial, Insider has enlisted two accountants — one pro-Trump, one not — both of whom also do stand-up comedy.
Because when it comes to GAAP, if we don't laugh, we'll die — of boredom.
What the heck, generally, is GAAP?
"GAAP is like a GPS for accountants," explains Tammara Buckey, a Huntsville, Alabama-based CPA, career coach, and stand-up comic.
"It tells us where to go and how to get there. Though some people still end up in a cornfield," she adds. "Or prison."
As our anti-Trump accountant, Buckey is surprised that the former president's disputed financial statements "weren't written in crayon and covered in 'good job' and 'you're a rock star' stickers."
Buckley won last year's Funniest Accountant in the South competition.
Meanwhile, Long Island, New York-based CPA and stand-up comic Steve Gianturco. a self-described longtime Trump fan, wonders, "Why is anybody surprised that he exaggerates?"
"He's the same guy he's ever been," Gianturco notes. "He's consistently Trump."
Gianturco, who performs in a bow tie and suspenders under the name "Stevie GB," boils down generally accepted accounting principles this way:
"GAAP is about following the same accounting rules over and over. And you would think Trump gets it since he says the same things over and over."
So, who decides GAAP? A panel of CPAs in wizard hats?
Exactly, minus the hats. Generally accepted accounting principles are set by the seven members of the Federal Accounting Standards Board, or FASB.
"The FASB's been around since the '70s, so they're like your parents, and GAAP are the rules they came up with," says Buckey, CEO of the consulting firm Raise Your Own Bar, an executive coaching firm.
And what do parents say?
"Take out the trash. Don't lie, cheat, or steal," Buckey explains. "Clean your room. Be home by 11. Don't commit fraud.''
That 'Federal Accounting Standards Board' sounds like a really lively bunch
"I wouldn't invite them to a party," Gianturco says.
"But if you did, they would probably be the only participants who would NOT spike the punch.''
The seven board members serve for up to two five-year terms.
They have some 60 support staff "to help them wade through thousands, if not millions, of pages of accounting doctrine and documentation, as well as coordinate with other groups, research problems, and provide recommendations," Buckey says.
"I can only assume they work 27 hours a day and are probably not human, either."
What does GAAP look like, physically?
About 1,000 pages — maybe even 8,000 pages, say our funny accountants. They're exaggerating in the spirit of the Trump case.
Suffice it to say, it's a lot of pages for what Gianturco says amounts to seven accountants shouting "DON'T COOK THE BOOKS" over and over.
GAAP has 10 key principles, Buckey says, all variations, she agrees, of "don't cook the books." They require that a company's official financial statements meet rigorous standards for consistency, accuracy, and transparency.
"FASB has a website where you can search for topics," Buckey says.
"It's less like Google and more like TikTok, where you can keep scrolling to the next topic — and the next topic, and the next topic — for hours on end," she says.
Until, as with TikTok, "you eventually shake your head, close your device, and walk away confused about what just happened."
What would happen if you tried to print it out from the internet?
Don't, Buckey advises. "You'd run out of ink, paper, and the will to live."
How would this 8,000-page book compare, say, to a juicy romance novel or crime drama?
"Personally," says Buckey, "I find it enthralling. But I also enjoy watching paint dry and write all my jokes in a spreadsheet."
Gianturco, asked this question, summons up a disturbing mental image.
"Not sure if the GAAP manual has a specific picture of Fabio holding a calculator," he says. "Although accountants have an inordinate amount of sex appeal."
Make that two disturbing mental images.
Finally, doesn't GAAP allow wiggle room in valuing assets, as Trump insists?
Yes, some wiggling is allowed. Just not wanton wiggling.
James, for instance, says Trump tripled the square footage of his triplex apartment in Manhattan's Trump Tower in financial statements from 2015, claiming it was worth $327 million, three times more than any apartment in the city had ever sold for.
He also valued Mar-a-Lago as high as $739 million. In reality, the club generated annual revenues of under $25 million and should have been valued at about $75 million, James alleges.
Under GAAP, "You are expected to be conservative in your estimates," Buckey said.
"In situations where there is wiggle room, you are expected to err on the side of caution, meaning on the side that is less advantageous to the business, not more advantageous."
"I know Trump would like to see them 'wiggle, wiggle, wiggle' for sure," she added. "But this ain't a Jason Derulo song."
Trump's civil fraud trial begins its second week on Tuesday.