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GAAP CODIFICATION
Q & A
What is the GAAP Codification?
The formal name is the FASB Accounting Standards Codification™, or Codification for short. The Codification organizes thousands of U.S. GAAP pronouncements under approximately 90 accounting topic areas.
When was the Codification released?
The FASB released the Codification on January 15, 2008, for verification by users of U.S. GAAP. The verification period will be one year, during which users may review the Codification and submit their feedback electronically.
Where can the Codification be found?
The Codification Research System is housed on the FASB website. Users who wish to review the Codification free of charge may register at http://asc.fasb.org
Why codify?
U.S. GAAP consists of thousands of individual pronouncements issued by standard setters, including the FASB, the AICPA’s Accounting Standards Executive Committee, the Emerging Issues Task Force and the SEC. Many users of GAAP believe it is confusing.
What does FASB hope to achieve through Codification?
The FASB believes the Codification will:
- Reduce the amount of time and effort required to solve an accounting research issue.
- Improve usability of the literature thereby mitigating the risk of noncompliance with standards.
- Provide real-time updates as new standards are released.
- Assist the FASB with the research and convergence efforts required during the standard-setting process.
- Become the authoritative source of literature for the completed XBRL taxonomy.
Is the Codification an attempt to change U.S. GAAP?
The Codification does not change U.S. GAAP. The goal of the Codification is to provide a more user-friendly, topically organized set of standards that decreases the research time necessary to address accounting issues.
What is included in the Codification?
The Codification includes all the following standards:
- FASB
- Statements (FAS)
- Interpretations (FIN)
- Technical Bulletins (FTB)
- Staff Positions (FSP)
- Staff Implementation Guides (Q&A)
- Emerging Issues Task Force
- Derivative Implementation Group (DIG) Issues
- Accounting Principles Board (APB) Opinions
- Accounting Research Bulletins (ARB)
- Accounting Interpretations (AIN)
- Statements of Position (SOP)
- Audit and Accounting Guides (AAG) – only incremental accounting guidance
- Practice Bulletins (PB)
- Technical Inquiry Service (TIS) – only for software revenue recognition
Also included will be relevant SEC guidance that will follow the same topical structure in separate sections of the Codification.
Are governmental standards included?
No.
Whom does the Codification affect?
The Codification affects preparers, auditors, tax practitioners, financial statement users, academics and students preparing to sit for the Uniform CPA Exam.
What is the AICPA’s position on the Codification?
As a standard setter whose pronouncements are represented, the AICPA supports the Codification because it organizes and simplifies GAAP. The Institute is encouraging all its members to review the Codification and submit their comments to the FASB.
What is the AICPA doing to educate its members about the Codification?
The Institute is preparing articles and other written documents that explain the Codification. The Institute will also introduce professional development courses specifically on the Codification, including webcasts, self-study and group-study.
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