FASB Accounting Standards Codification™—A Step toward Convergence
IFRS.com | April 2009
An important element of the Financial Accounting Standards Board's move towards convergence of its standards with International Financial Reporting Standards is the development of the FASB Accounting Standards Codificatio™ (the "Codification"), which is expected to become authoritative on July 1, 2009.
When effective, the Codification will be the single source of authoritative U.S. generally accepted accounting principles (GAAP) applicable for all nongovernmental entities, except for rules and interpretive releases issued by the Securities and Exchange Commission (SEC), which are sources of authoritative GAAP for SEC registrants. The FASB Codification will supersede all then-existing non-SEC accounting and reporting standards for nongovernmental entities. All other non-grandfathered, non-SEC accounting literature not included in the Codification will become non-authoritative.
On March 27, 2009, the FASB officially issued an exposure draft to set the process in motion to meet a July 1, 2009 effective date. FASB's proposed statement The Hierarchy of Generally Accepted Accounting Standards – a replacement of FASB Statement No. 162 identifies the sources of accounting principles and the framework for selecting the principles and will authorize the Accounting Standards Codification™ as GAAP. The comment deadline on the Exposure Draft ends May 8, 2009.
The Codification is a major restructuring of accounting and reporting standards designed to simplify user access to all authoritative U.S. GAAP by providing the authoritative literature in a topically organized structure. The Codification was developed by disassembling and reassembling thousands of nongovernmental accounting pronouncements (including those of FASB, the Emerging Issues Task Force, and the AICPA) to organize them under approximately 90 topics and include all accounting standards issued by a standard setter within levels A - D of the current U.S. GAAP hierarchy.
The Codification also includes relevant portions of authoritative content issued by the SEC, as well as selected SEC staff interpretations and administrative guidance issued by the SEC; however, the Codification is not the official source of SEC guidance and does not contain the entire population of SEC rules, regulations, interpretive releases, and staff guidance. Moreover, the Codification does not include governmental accounting standards.
The topical structure of the Codification correlates closely to standards issued by the International Accounting Standards Board (IASB). Codification topics reside in four main areas; including presentation, financial statement accounts, broad transactions, and industries. Within each topic are sections, which also correlate very closely with sections of individual international accounting standards.
The AICPA has been actively monitoring development of the Codification and has a dedicated Web site that includes many useful resources. The site is located on the AICPA main page under Professional Resources—Accounting and Auditing—FASB Accounting Standards Codification.
The FASB Accounting Standards Codification™ Web site can be found at http://asc.fasb.org. Registered users can access all of the content on the site including the Codification.
