FASB launches verification phase for Accounting Standards Codification for GAAP
The Financial Accounting Standards Board has officially launched the one-year verification phase of the FASB Accounting Standards Codification. During the verification period, constituents are encouraged to use the online Codification Research System free of charge to research accounting issues and provide feedback on whether the Codification content accurately reflects existing U.S. generally accepted accounting principles (GAAP) for nongovernmental entities. Users are advised that the Codification content is not yet approved as authoritative and, therefore, they must verify research results using their existing resources for the currently effective literature.
After addressing the issues raised during the constituent feedback process, the FASB is expected to formally approve the Codification as the single source of authoritative U.S. GAAP, other than guidance issued by the Securities and Exchange Commission (SEC). To improve usability, the Codification will include authoritative content issued by the SEC, as well as selected SEC staff interpretations. Upon approval by the FASB, all accounting standards (other than the SEC guidance) used to populate the Codification will be superseded. At that time, with the exception of any SEC or grandfathered guidance, all other accounting literature not included in the Codification will become nonauthoritative.
Users who register at the FASB Web site are able to review the Codification free of charge and provide specific content-related feedback at the individual paragraph level as well as general system-related feedback. During the verification period, Codification content will be updated for changes resulting from constituent feedback and new standards.
The Codification includes all accounting standards issued by a standard-setter within levels A through D of the current U.S. GAAP hierarchy, including FASB, American Institute of Certified Public Accountants (AICPA), Emerging Issues Task Force (EITF), and related literature.
The Codification does not change GAAP; instead it reorganizes the thousands of U.S. GAAP pronouncements into roughly 90 accounting topics, and displays all topics using a consistent structure. The SEC guidance will follow a similar topical structure in separate SEC sections.
The FASB expects that the new structure and new system 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.
The home page of the Codification Research System includes various items that users should be aware of, including:
A suggested approach for verifying the Codification content.
A Notice to Constituents that describes Codification-related matters, including content matters for constituent feedback. For example, the Notice addresses the standards and elevated guidance used to populate the Codification, the use of December 31, 2008, as the authoring effective date, and conflicts resolved by Board decision for which the Board is requesting feedback.
Content excluded from the Codification Research System on the verification launch date. The FASB expects to release such content shortly after the initial launch.
The Codification Research System also includes general information about how to use the online research system and special features such as Cross Reference Reports (to locate where standards reside), Join Sections (to join similar Sections from multiple Topics and Subtopics into a single document), and Go To (to jump directly to a specific Topic, Subtopic, Section, or paragraph). The Accounting Standards Codification excludes governmental accounting standards.