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US GAAP codification. What is it? Who does it affect?

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The project: The FASB Accounting Standards Codification

Read the following excerpt from the Journal of Accountancy:

"Accounting research has changed dramatically, shifting CPAs to an online tool for searching and referencing U.S. GAAP. On July 1, the FASB Accounting Standards Codification (ASC) became the single source of authoritative U.S. accounting and reporting standards for nongovernmental entities, in addition to guidance issued by the
SEC. The ASC disassembled and repackaged thousands of pronouncements (including guidance from FASB, FASB's Emerging Issues Task Force and the AICPA Accounting Standards Executive Committee) to organize them under roughly 90 topics."

For the project:

1. Go to the Journal of Accountancy GAAP Codification Resource Page at:

http://www.journalofaccountancy.com/Web/Codification.htm

2. Learn about the new codification. What is it? Who does it affect? How is it used? How will it change the profession? The video is a good place to begin to get an overview of the codification. Then, watch the power point presentation and read any articles that look helpful.

3. Discuss the codification.

Response give the student an outline to use to write a paper, including ideas about how to personalize their efforts.

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Solution Summary

This pragmatic discussion about the codification discusses how it differs from prior authoritative GAAP records and how to get a live tour of the new structure for researching US GAAP.

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Of course you know I can't do the assignment for you...so here is an orientation to get you started....

Goodness....the codification is such a great improvement over the prior way of organizing GAAP! If you didn't have to remember FAS numbers and looks stuff up in several different FAS report you don't know the yuck you missed. The codification organizes authoritative literature by topic and combines all related stuff together. You won't really be able to talk about it without getting a "visual" by going to the web site and seeing the "tiers" of how everything is organized.

Who does it affect? Anyone wanting to issue GAAP financials! I doubt readers of f/s will go there but they might. Certainly preparers and auditors would use it.

How it will change the profession is still up in the air since it just started last summer. You might find some articles in the journal of accountancy or the business press (do you have a library where you can put in key words and search on "codification" and see if you get some editorials on this). Some ideas (just mine, you'll want a few sources no doubt)...

make it easier to cite work
make it less likely that some GAAP requirement is over-looked (all in one place)
easier for students to learn (see article attached)
easier for non-accountants to comply (see lawyer publication below)

Title: Statement on the Effect of the FASB Codification on Audit Response Letters.
source: Business Lawyer, Feb2010, Vol. 65 Issue 2, p491-492

The Financial Accounting Standards Board ("FASB") has codified its accounting standards under a unified ...

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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