Researching FASB’s ASC

Effective for FS issued after 9/15/09The “codification” replaces previous standards

Acct 592 version

Evolution of U.S. GAAP

1938

CAPformed

1959

APBformed

1973

FASBformed

CAPIssued

51ARBs

APBIssued

31Opinions

FASBIssued____

Statements

21 years 14 years 36 years

168

5 to 6 per year

2009

Codification Effective

2009

AICPA Accounting Interpretations

FASB Implementation Guides

Widely recognized and prevalent industry

practices

FASBStatements and Interpretations

APBOpinions

AICPA

Accounting Research Bulletins

FASBTechnical Bulletins

AICPA Industry Audit and Accounting Guides

AICPAStatements of

Position

FASB Emerging Issues Task Force AICPA AcSEC Practice Bulletins

The House of GAAP

Most Authoritative

Least Authoritative

FASB’s Accounting Standard Codification

The ASC is the single source of authoritative nongovernmental U.S. GAAP, except for SEC guidance

The “GAAP Hierarchy” now has only 2 levels:Everything in ASC is “equally authoritative”If it isn’t in ASC, refer to textbooks, concept

statements, industry practices, IFRS, etc.FASB Statement No. 168 made it “official” and

is the “last ever” in the series – future changes will be made through “ASC Updates”

Benefits of the ASCAll non-SEC authoritative guidance is now in

one place!Updates and additions to guidance will be

incorporated into appropriate topics instead of a new document number to add to the existing 168 standards

Users can have more confidence that all authoritative guidance has been reviewed or considered in researching an accounting matter

Codification generally didn’t change GAAPLanguage from the original pronouncements was

edited for consistency and certain words were changed (for example, “should” and “must” were replaced with “shall”)Exception is software revenue recognition guidance

from an AICPA Technical Inquiry Serivce (TIS) document which was not previously followed by some nonpublic companies

What is included in ASC?FASB Statements, Interpretations,

Technical Bulletins, FSPs, EITFs, DIG and other implementation guidance, some older material from AICPA Committee on Accounting Procedures and Accounting Principles Board, AICPA SOPs, etc.

Some SEC guidance is included for convenience but safer to check SEC.GOV

What you won’t findFASB concept statementsGovernment accounting standardsGrandfathered materialStandards that were outdated or

superseded as of December 31, 2008Guidance for non-GAAP matters such as

cash or income tax basis accountingSome of the “basis for conclusion”

material

Place topic onagenda

Appoint TaskForce

ConductResearch

IssueDiscussion

Memorandum

Hold publichearing

Analysis ofpublic response

Issue ExposureDraft of ASU

Hold PublicHearings

Analysis ofpublic response

Modify exposuredraft

Vote(approval requires

5 of 7)

Issue AccountingStandard Update (ASU)

Due Process in StandardSetting

Standardized Section Numbers

Referencing the “authoritative” guidance in the ASCExamples from Grant Thornton

Companies will be busy modifying their “notes to the FS”Choices would be to

Refer to ASC by section numbersJust describe accounting policy in plain English

without reference to ASCFor research projects in THIS class, you need

to refer to the specific sections and even paragraphs of the ASC Refer back to previous slide on “how to

reference”It looks sort of like a social security number!

Let’s go to FASB.ORG

Sour Grapes & Interest CostsStep 1 – read the case, look for “key words”The Master Glossary can sometimes be helpful

There is no “index” like you might find in a textbook

Some glossary items have “hot links” that take you to what you need in the ASC

Think of likely “topics” under which you might find the “rules” you needDrop-down menu on left of screenBroad topics include Assets, Liabilities, Revenues,

etc.Use “search box” at top