Are you ready for the new FASB ASC?
The codification significantly changes the structure and hierarchy of accounting standards. Are you as familiar with it as you need to be? Read on for a description of the codification, as well as a list of useful resources that will help get you where you need to be.
On June 30, 2009, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 168, The FASB Accounting Standards Codification™ and the Hierarchy of Generally Accepted Accounting Principles—a replacement of FASB Statement No. 162. On the effective date of this standard, FASB Accounting Standards Codification™ (ASC) will become the source of authoritative U.S. accounting and reporting standards for nongovernmental entities, in addition to guidance issued by the Securities and Exchange Commission (SEC). FASB ASC significantly changes the way financial statement preparers, auditors, and academics perform accounting research.
This statement is effective for financial statements issued for interim and annual periods ending after September 15, 2009. Nonpublic nongovernmental entities that have not previously followed the guidance included in paragraphs .38–.76 of the AICPA Technical Questions and Answers section 5100, “Revenue Recognition” (AICPA, Technical Practice Aids), which is now included in FASB ASC as authoritative, should account for the adoption of that guidance as a change in accounting principle, on a prospective basis, for revenue arrangements entered into or materially modified in those fiscal years beginning on or after December 15, 2009, and interim periods within those years. If an accounting change results from the application of this guidance, an entity should disclose the nature and reason for the change in accounting principle in their financial statements. This new standard flattens the GAAP hierarchy to two levels: one that is authoritative (in FASB ASC) and one that is nonauthoritative (not in FASB ASC). Exceptions include all rules and interpretive releases of the SEC under the authority of federal securities laws, which are sources of authoritative GAAP for SEC registrants, and certain grandfathered guidance having an effective date before March 15, 1992. This standard creates Topic 105, Generally Accepted Accounting Principles, in FASB ASC.
FASB Statement No. 168 is the final standard that will be issued by FASB in that form. It was added to FASB ASC through Accounting Standards Update No. 2009-02 on June 30, 2009. There will no longer be, for example, accounting standards in the form of statements, staff positions, Emerging Issues Task Force (EITF) abstracts, or AICPA Accounting Statements of Position. Instead, FASB will issue Accounting Standards Updates. FASB will not consider Accounting Standards Updates as authoritative in their own right. Instead, they will serve only to update FASB ASC, provide background information about the guidance, and provide the basis for conclusions on changes made to FASB ASC.
The GAAP hierarchies of nongovernmental, state and local, and federal reporting entities have resided in SAS No. 69 in the auditing literature. Due to the issuance of FASB Statement No. 168, as well as similar statements recently issued by the Governmental Accounting Standards Board and Federal Accounting Standards Advisory Board to incorporate their respective GAAP hierarchies into their respective authoritative literature, the Auditing Standards Board voted to withdraw AU section 411 from the auditing standards. The withdrawal is effective in September 2009, which coincides with the effective date of FASB Statement No. 168.
FASB ASC is a major restructuring of accounting and reporting standards designed to simplify user access to all authoritative U.S. generally accepted accounting principles (GAAP) by providing the authoritative literature in a topically organized structure. FASB ASC disassembled and reassembled thousands of nongovernmental accounting pronouncements (including those of FASB, the EITF, 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. FASB ASC 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, FASB ASC 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, FASB ASC does not include governmental accounting standards. FASB ASC is not intended to change U.S. GAAP or any requirements of the SEC.
Among other things, FASB ASC aims to
- reduce the amount of time and effort required to solve an accounting research issue.
- mitigate the risk of noncompliance with standards through improved usability of the literature.
- provide accurate information with real-time updates as new standards are released.
- assist FASB with the research and convergence efforts required during the standard setting process.
- become the authoritative source of literature for the completed XBRL taxonomy.
- make clear that guidance not contained in FASB ASC is not considered to be authoritative.
FASB ASC represents a major shift in the organization and presentation of U.S. GAAP. To read more about it, including recent developments and updates, please see our FASB ASC Overview and Recent Developments page. Also, to help you better understand this shift, we have compiled the following list of resources. We continually update this list with additional resources as new information becomes available, so be sure to check back periodically.
Official FASB Resources
- FASB ASC Web site. The official Web site for FASB ASC. Upon registering for either the basic view or the professional view version, you can then access the codified content and provide feedback to FASB using your registered username and password. The left navigation bar provides a number of useful links, including those to the notice to constituents (which provides information you should read to obtain a good understanding of FASB ASC history, content, structure, and future consequences). Note that certain features may still appear but not be available for use in the basic view version.
- FASB homepage. Find all of the latest information regarding the release of FASB ASC, a summary and the full text of FASB Statement No. 168, as well as a link to the FASB ASC homepage.
- Codification resources. Many valuable FASB ASC resources, including project updates, Countdown to Codification alerts (a series of weekly e-mails featuring tips for the transition to FASB ASC), FASB ASC webcasts, and press releases. It also includes information on the two different views, including pricing for the professional view.
Webcasts
- Archived AICPA webcast from July 14. Presented by the AICPA on July 14, 2009, panelists Susan Cosper, Tom Hoey, and Keira Lichtenstein discuss background of FASB ASC, demonstrate and walk-through FASB ASC, and discuss real world implications for preparers and auditors.
- Archived FASB webcast from June 22. Presented by FASB on June 22, 2009, panelists Larry Smith, Tom Hoey, and Peter Proestakes discuss transitioning to FASB ASC.
Articles and Publications
Archive of Previous Webcasts and Articles