FASB Says Proposed 'Technical Corrections' to Code Not Pervasive, But May Result in Changes to Practice

On October 14, the FASB released a 214-page set of proposed technical corrections to the Accounting Standards Codification. Comments are due by December 13. As described further below, FASB states the 'technical corrections' are not intended to be pervasive, and are 'generally nonsubstantive in nature,' however, they may cause some changes in current practice. The moral of the story is: you or your auditor (or client) should review the proposal to determine how extensive a change in practice, if any, these 'technical changes' may require (and file comment letters on the proposal, if you wish, accordingly).
 
The proposed changes, which cover a wide variety of areas. Included among the proposed changes are include certain ‘conforming’ changes to reflect FAS 157, Fair Value Measurement, in certain parts of the Codification that were not previously updated (e.g., to change certain references from ‘market value,’ or ‘mark to market’ to ‘fair value.’)
According to the board, the proposed changes to the Codification are aimed at being ‘technical’ in nature, vs. ‘pervasive’ or ‘substantive.’  As explained  in FASB’s press release (reformatted into bullets): 
  • Periodically, the FASB updates the Codification for technical corrections and clarifications that are deemed necessary.
  • The amendments included in this proposed Update cover a wide range of Topics and are generally nonsubstantive in nature.
  • Many of the proposed amendments update terminology to conform with Topic 820 (Fair Value Measurement).
  • The Board does not anticipate that the amendments in this proposed Update would result in pervasive changes to current practice.
Importantly, FASB notes in the Exposure Draft of the proposed changes to the Codification:
  • The Board does not anticipate that the amendments in this proposed Update would result in pervasive changes to current practice.
  • However, it is possible that certain proposed amendments may result in a change to existing practice.
The effective date of the proposed amendments would be determined after the Board considers comments on the proposal.
 
The comment deadline is Dec. 13, 2011.

 

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FEI Financial Reporting Blog provides highlights from SEC, PCAOB, FASB, IASB, and other regulatory news, including reporting under Sarbanes-Oxley Sect 404. It is written by Edith Orenstein, Director of Technical Policy Analysis at FEI

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