FASB Launches Single, Online Book of Authoritative GAAP
By Steve Burkholder
Publication date: 07/02/2009
NORWALK, Conn.—The Financial Accounting Standards Board July 1 officially launched its new online sole source of authoritative generally accepted accounting principles.
Almost five years in the making, the product of what FASB calls the “codification” of GAAP is aimed at easing use of myriad accounting standards and other guidance by way of a topical structure with cross-reference capabilities. Users of the codified reference system are able to drill down into the rules, subtopic by subtopic, section by section.
Updates to the codification will be made as FASB crafts changes in accounting policies. New, but not yet effective, authoritative guidance will be labeled “pending content.”
FASB Chairman Robert Herz has likened the board's codification effort to a public works project to improve financial reporting. Over the years, more than 200 people helped complete the codification, Neal McGarity, a FASB spokesman, told BNA in an e-mail message.
Herz Cites Effort as ‘Milestone’
“Today's launch of the codification represents a milestone in U.S. accounting standards,” Herz said in a prepared statement. “After years of development, this much more efficient, user-friendly method of researching up-to-date solutions has become a reality.”
The codification includes what FASB calls a “robust word search function.”
Before the codification, companies, auditors, and other users of disparate accounting guidance issued by the board and other rulemakers ran a heightened risk of not being in compliance with GAAP, the board suggested. They did so because they could not be certain that they had found all rules relevant to a specific financial reporting situation.
FASB expects that the codification “will reduce the amount of time and effort required to research an accounting issue, will mitigate the risk of noncompliance with standards through improved usability of the literature and will provide real-time updates as new Accounting Standards Updates are released,” according to FASB Statement 168, which was released June 29.
Final FAS Recognizes Authority
FAS 168—the last of the GAAP standards numbered in that fashion—formally established the “FASB Accounting Standards Codification” as the source of authoritative accounting principles recognized by FASB.
The codified, online sourcebook of GAAP also contains references to “relevant portions of authoritative content” issued by the Securities and Exchange Commission, as well as selected SEC staff interpretations and administrative guidance, FASB wrote in a guide to the codification offered as frequently asked questions, with answers.
However, the accounting board stressed that the new primary GAAP source does not contain “the entire population of SEC rules, regulations, interpretive releases and staff guidance,” according to the codification FAQ.
SEC Staff Forbearance Signaled
At the SEC, acting Chief Accountant James Kroeker signaled June 30 that the commission's staff would not be sticklers—at least in an unspecified transition period—about references in registrants' financial filings that do not fully comport with the new topical numbering system contained in the codification.
At a meeting of FASB's main advisory council, Kroeker suggested that a reference to the old system's numbers for guidance would not be cause for a restatement. The SEC accountant told the Financial Accounting Standards Advisory Council that he wanted “to give everyone comfort” on that score.
The interpretive release may be presented to the commission within a few weeks.
Four-Level GAAP Hierarchy Cut to Two
With the codification and issuance of FAS 168, FASB cut the formal hierarchy of generally accepted accounting principles—four levels under the system derived from auditing literature—to two levels: authoritative and nonauthoritative.
Thus, issuance of the new, single source of accounting rules reflects in part an effort toward simplification and codification of accounting standards, as advised by the Securities and Exchange Commission after the Enron and WorldCom scandals of 2001-2002.
Not only is the old numbering system of “FASB Statement No. XXX, eliminated; so also, going forward, are direct references to consensus positions of the board's Emerging Issues Task Force, for example, as well as other guidance, such as that issued by the American Institute of Certified Public Accountants.
Sept. 15 Effective Date
FAS 168, the statement that essentially codified the codification, is effective for financial statements issued for interim and annual periods ending after Sept. 15, 2009.
FASB hopes to publish a printed, four-volume edition of the codification in late summer.
Online use of the codification requires registration. What FASB calls the “basic view” of the codification is free.
An annual subscription to a “professional view,” with a list of more powerful search features, costs $850 for “single concurrent use,” according to the board. FASB offers quantity discounts for “multiple concurrent use.” The latter allows more that one person to gain access to the codification at the same time.
The Web site for FASB's GAAP codification, with pricing and registration information, is at http://asc.fasb.org/. FAS 168, establishing codified GAAP, is available through http://www.fasb.org/.
The complete text of this article can be found in the BNA Daily Tax Report, July 2, 2009. For comprehensive coverage of taxation, pension, budget, and accounting issues, sign up for a free trial or subscribe to the BNA Daily Tax Report today. Learn more »
© 2009, The Bureau of National Affairs, Inc.
FASB Launches Single, Online Book of Authoritative GAAP
By Steve Burkholder
Publication date: 07/02/2009
NORWALK, Conn.—The Financial Accounting Standards Board July 1 officially launched its new online sole source of authoritative generally accepted accounting principles.
Almost five years in the making, the product of what FASB calls the “codification” of GAAP is aimed at easing use of myriad accounting standards and other guidance by way of a topical structure with cross-reference capabilities. Users of the codified reference system are able to drill down into the rules, subtopic by subtopic, section by section.
Updates to the codification will be made as FASB crafts changes in accounting policies. New, but not yet effective, authoritative guidance will be labeled “pending content.”
FASB Chairman Robert Herz has likened the board's codification effort to a public works project to improve financial reporting. Over the years, more than 200 people helped complete the codification, Neal McGarity, a FASB spokesman, told BNA in an e-mail message.
Herz Cites Effort as ‘Milestone’
“Today's launch of the codification represents a milestone in U.S. accounting standards,” Herz said in a prepared statement. “After years of development, this much more efficient, user-friendly method of researching up-to-date solutions has become a reality.”
The codification includes what FASB calls a “robust word search function.”
Before the codification, companies, auditors, and other users of disparate accounting guidance issued by the board and other rulemakers ran a heightened risk of not being in compliance with GAAP, the board suggested. They did so because they could not be certain that they had found all rules relevant to a specific financial reporting situation.
FASB expects that the codification “will reduce the amount of time and effort required to research an accounting issue, will mitigate the risk of noncompliance with standards through improved usability of the literature and will provide real-time updates as new Accounting Standards Updates are released,” according to FASB Statement 168, which was released June 29.
Final FAS Recognizes Authority
FAS 168—the last of the GAAP standards numbered in that fashion—formally established the “FASB Accounting Standards Codification” as the source of authoritative accounting principles recognized by FASB.
The codified, online sourcebook of GAAP also contains references to “relevant portions of authoritative content” issued by the Securities and Exchange Commission, as well as selected SEC staff interpretations and administrative guidance, FASB wrote in a guide to the codification offered as frequently asked questions, with answers.
However, the accounting board stressed that the new primary GAAP source does not contain “the entire population of SEC rules, regulations, interpretive releases and staff guidance,” according to the codification FAQ.
SEC Staff Forbearance Signaled
At the SEC, acting Chief Accountant James Kroeker signaled June 30 that the commission's staff would not be sticklers—at least in an unspecified transition period—about references in registrants' financial filings that do not fully comport with the new topical numbering system contained in the codification.
At a meeting of FASB's main advisory council, Kroeker suggested that a reference to the old system's numbers for guidance would not be cause for a restatement. The SEC accountant told the Financial Accounting Standards Advisory Council that he wanted “to give everyone comfort” on that score.
The interpretive release may be presented to the commission within a few weeks.
Four-Level GAAP Hierarchy Cut to Two
With the codification and issuance of FAS 168, FASB cut the formal hierarchy of generally accepted accounting principles—four levels under the system derived from auditing literature—to two levels: authoritative and nonauthoritative.
Thus, issuance of the new, single source of accounting rules reflects in part an effort toward simplification and codification of accounting standards, as advised by the Securities and Exchange Commission after the Enron and WorldCom scandals of 2001-2002.
Not only is the old numbering system of “FASB Statement No. XXX, eliminated; so also, going forward, are direct references to consensus positions of the board's Emerging Issues Task Force, for example, as well as other guidance, such as that issued by the American Institute of Certified Public Accountants.
Sept. 15 Effective Date
FAS 168, the statement that essentially codified the codification, is effective for financial statements issued for interim and annual periods ending after Sept. 15, 2009.
FASB hopes to publish a printed, four-volume edition of the codification in late summer.
Online use of the codification requires registration. What FASB calls the “basic view” of the codification is free.
An annual subscription to a “professional view,” with a list of more powerful search features, costs $850 for “single concurrent use,” according to the board. FASB offers quantity discounts for “multiple concurrent use.” The latter allows more that one person to gain access to the codification at the same time.
The Web site for FASB's GAAP codification, with pricing and registration information, is at http://asc.fasb.org/. FAS 168, establishing codified GAAP, is available through http://www.fasb.org/.
The complete text of this article can be found in the BNA Daily Tax Report, July 2, 2009. For comprehensive coverage of taxation, pension, budget, and accounting issues, sign up for a free trial or subscribe to the BNA Daily Tax Report today. Learn more »
© 2009, The Bureau of National Affairs, Inc.
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