|
||||||||||
|
What You Need to Know... |
|
|
|||||||
Topics
|
Special Report |
Downloadable summary
FAQs
What is the US Accounting Standards Codification? The Codification is an interactive web-based tool that provides the current text of US accounting standards. Currently, it cannot be downloaded in its entirety in a format like a Microsoft Word or pdf document. The FASB expects to make a print version available in late August or early September 2009, but Board members have cautioned the print format can be awkward due to the need for page flipping in lieu of links.
Sponsored Links
FAQs (continued) Why did the FASB develop and issue the Codification? The interactive format is designed to improve access to US accounting standards and simplify the sometimes tedious process that companies and auditors must go through to research the standards that apply to a particular situation. Is the Codification investor-friendly? The Codification itself is reasonably investor-friendly. You will need to register and log in to the FASB's website to use the free version, and you will need some basic computer literacy, along with access to a computer connected to the Internet. The cost of a professional view is relatively high for an individual investor who is not part of a group. Companies can make their reports even more user-friendly for investors by providing plain-English explanations of the accounting standards rather than technical references, whenever possible Has the SEC issued any guidance to companies on the use of the Codification or references to it? The SEC issued an interpretive release on August 18, 2009, and the SEC Staff shared their views with the CAQ SEC Regulations Committee. The staff's views are summarized in CAQ Alert No. 2009-76 dated August 17, 2009. Will the Codification be integrated with XBRL reporting for future SEC filings? Yes. On August 4, 2009, the FASB, together with XBRL US, issued a set of extensions to the US GAAP taxonomy that are available for use by companies that are required to furnish reports in XBRL format or that choose to do so voluntarily. Has the PCAOB issued any guidance to auditors on the Codification? On September 2, 2009, the PCAOB issued Staff Q&As on references to the Codification. The Q&A indicates that the audit documentation for reviews or audits of financial statements for periods ending after September 15, 2009 should use the Codification (ASC) references. The Q&A also says it is desirable but not necessary to update existing audit documentation containing pre-Codification references to US GAAP. Questions may be sent to Greg Scates (scatescq@pcaobus.org)or Barbara Vanich (vanich@pcaob.org). Should private companies use the same Codification? Yes. The Codification prefaces any reference to an accounting requirement that applies only to public companies with an "S" which short for SEC. Thus, the same interactive tool can be used by both public and private companies that use US GAAP. The International Accounting Standards Board has issued a separate standard on International Financial Reporting Standards (IFRS) for Private Entities. But the US has not yet decided whether it will follow suit. Is there a comparable Codification of IFRS? Not at this time. The Codification is a strength of US accounting standards and a source of comparative advantage, at least for the time being. Because there is no strictly comparable codification of IFRS, the use of the Codification and references to it may require some explanations for the benefit of non-US investors. A good source of background information is ASU No. 2009-01, Topic 105 - Generally Accepted Accounting Principles - amendments based on Statement of Financial Accounting Standards No. 168, "The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles." This ASU is available on the FASB's website without the need to register or log in.
|
||||||||
Accounting Codification: Will It Improve Reporting? Last updated: September 2, 2009.
Now that the US Accounting Standards Codification is live and operational, investors in public companies that report under US generally accepted accounting principles (GAAP) can look forward to subtle but important improvements in financial reporting. The Codification could lead to more plain-English explanations and less technical jargon in the notes to the statements starting with quarterly reports for third quarter 2009. Public companies are weighing the merits of a move in that direction now. The shift is raising questions for management and boards of directors, and the answers that emerge could well lay the groundwork for better financial reporting, both in the US and around the world.
Overview of the changes
When the Codification went live on July 1, 2009, it altered four fundamental aspects of US accounting standards.
The corporate response
The new reporting frontier opened up by the Codification will provide investors with a convenient way to test how committed a company's management and audit committee are to the kinds of plain-English explanations that can help simplify financial reporting and foster a better understanding of their financial statements. No doubt, some companies will choose to use only plain-English explanations with no ASC references, while others will opt for the ASC references or a mix of the two. The overall trend is not yet clear. Currently, companies seem to be weighing the risks and opportunities in a series of three questions.
Viewpoint
The trend toward plain-English disclosures is particularly important for US companies and investors. The US differs from other countries in that more half of our population is invested in the stock market, and there is considerable diversity among the users of financial statements. At one end of the spectrum are sophisticated financial analysts and big institutional investors who may be fully conversant with the underlying accounting standards. At the other end are individual investors, some of whom may have a tougher time sorting through the notes and references to related standards. The latter would benefit greatly from the types of plain-English explanations that enhance transparency and understanding. Because of their unique position in the global markets, US companies should take the lead in the area of plain-English disclosures and fight to make their financial reports as meaningful as possible to as many users as possible. |
Links
Pre-Codification Accounting Standards
Current Accounting Standards Codification (You must be registered and logged in to use the Codification.)
Accounting Standards Updates (ASUs) issued to date
Cross Reference Table - to convert old references to new (You must be logged in to use the cross reference table.)
XBRL/ Codification Alignment Announcement
XBRL US GAAP Taxonomy Extensions
|
|||||||||
Copyright © 2009 Center for Financial and Accounting Literacy |
The sponsored links are selected by Google. At times, Google may use technology known as a DART cookie to determine the ads that are best suited to our readers' interests. To learn more or opt out of the DART cookie, visit the Google ad and content network privacy policy.
|
|||||||||
|
|
|
||||||||
|
|