Prof. Sonia Feliciano, CPA Workshop to: Accounting Professors
UPR Bayamn March 27, 2009 FASB Accounting Standards Codification
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OBJECTIVES To obtain a good understanding of the FASB Standards
Codification System To encourage the use of the Codification
Research System for research 2
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House of GAAP AICPA Accounting Interpretations FASB
Implementation Guides Recognized Industry Practices FASB Emerging
Issues Task Force AICPA AcSEC Practice Bulletins FASB Technical
Bulletins Category D (Least Authoritative) AICPA Industry Audit and
Accounting Guides AICPA Statements of Position Category C FASB
Statements, Interpretations, and Staff Positions APB Opinions APB
Opinions CAP Accounting Research Bulletins Category B Category A
(Most Authoritative) Category A (Most Authoritative) 3
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FASBFASB Preparers (e.g., FEI) Financial Community Financial
Community Government (SEC, IRS, other agencies) Industry
Associations Industry Associations Business Entities CPAs and
Accounting Firms CPAs and Accounting Firms AICPA (AcSEC)
Academicians Investing Public Accounting standards,
interpretations, and bulletins Standard Setting LO 8 Describe the
impact of user groups on the standard-setting process. Illustration
1-5 Illustration 1-5 User Groups that Influence Accounting
Standards 4
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Why Codify U.S. GAAP? Constituent concern that U.S. GAAP is
overly confusing and difficult to research Multiple types of
standards, multiple standard setters, multiple indexing schemes,
and different levels of authority make it difficult to retrieve all
relevant U.S. GAAP
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FASB Accounting Standards Codification Four-year project
involving over 200 people from multiple entities Significantly
different from the structure of existing accounting standards A
major restructuring of accounting and reporting standards: a
reconfiguration of current GAAP 6
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The FASBs intent in creating the Codification is that the
content accurately represent existing standards Authors were
instructed to change as few words as possible when authoring their
topics As of July 1, 2009 the FASB expects to formally approve the
Codification as the single source of authoritative US accounting
and reporting standards 7
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FASB Accounting StandardsCodification Primary Goal Simplify
user access to all authoritative US generally accepted accounting
principles (GAAP) by providing all the authoritative literature in
one place 8
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FASB expects that the codification: Will help mitigate the risk
of noncompliance with accounting standards Provide real-time
updates as standards change and, Reduce the amount of time and
effort required to research accounting issues. 9
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Reassembled the pieces into approximately 90 topics Contents in
each topic are further organized first by subtopic, then section
and finally paragraph. 10
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The paragraph level is the only level that contains substantive
content; all higher levels in the topical structure exist merely to
organize the paragraph level content The SEC guidance in the
codification will be provided strictly on a convenience basis, and
FASB has made extensive disclaimer regarding reliance on it.
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Before Codification is authoritative FASB strongly encourages
use of the Codification Research System for research Until
Codification is authorithative, the web-based online research tool
is freely available to users Users must keep in mind that the
Codification has not been approved as authoritative 13
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Codification structure, content and styles Presentation Topic
codes 205-299 only to presentation matters. Financial Statements
Accounts Topic codes 305 -700 organizes topics in a financial
statement order including Assets, Liabilities Equity, Revenue, and
Expenses. Topics include Receivables, Revenue Recognition,
Inventory, and so forth. 14
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Broad Transactions Topic Codes 805 899 relate to multiple
financial statement accounts and are generally transaction-
oriented. Topics include Business Combinations, Derivatives,
Nonmonetary transactions, an so forth. Industries Topic Codes
905-999 relate to accounting that is unique to an industry or type
of activity. Topics include Airlines, Software, Real State, and so
forth. 15
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Description of the Sections XXX-YY-ZZ XXX Topic YY Subtopic ZZ
- Section 16
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Sections of each Subtopic XXX-YY-00 Status XXX-YY-05 Overview
and Background XXX-YY-10 Objectives XXX-YY-15 Scope and Scope
Exceptions XXX-YY-20 Topical Definitions-Glossary XXX-YY-25
Recognition XXX-YY-30 Initial Measurement XXX-YY-35 Subsequent
Measurement 17
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XXX-YY-40 Derecognition XXX-YY-45 Other Presentation Matters
XXX-YY-50 Disclosure XXX-YY-55 Implementation Guidance and
illustrations XXX-YY-60 Relationship XXX-YY-65 Transition and Other
Effective Date information XXX-YY-70 Links to Grandfathered
Material XXX-YY-75 XBRL Definitions 18
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Description of the Sections XXX-YY-00 - Status : includes
references to the post- Codification standards that affect the
Subtopic XXX-YY-05 general overview and background regarding the
subtopic XXX-YY10 states the high-level objectives of the Subtopic,
but does not discuss the main principles of the Subtopic 19
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XXX-YY-15 Scope and Scope Exceptions: outlines the items( for
ex. entities, transactions, instruments or events) to which the
guidance in the Subtopic does or does not apply. It does not
contain actual accounting or reporting guidance (for ex. subsequent
measurement) XXX-YY-20 Glossary: all the glossary terms used in the
Subtopic 20
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XXX-YY-25 Recognition: criteria, timing, and location(within
the financial statements) for recognizing a particular item.
XXX-YY-30 - Initial Measurement: criteria and amounts used to
measure a paricular item at date of recognition. 21
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XXX-YY-35 Subsequent Measurement: criteria and amounts used to
measure a particular asset, liability, or equity item subsequent to
the date of recognition (for ex. impairment, fair value changes,
depreciation, amortization, and similar items). 22
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XXX-YY-40 - Derecognition: criteria, basis, and timing to be
used when derecognizing a particular asset, liability or equity
item for purposes of determining gain or loss if any (Ex. Sale,
other disposal or loss of assets; and settlement and cancellation
of liabilities) XXX-YY-45 - Presentation matters: related to the
topic (Ex. Specific balance sheet classification, specific cash
flow requirements, specific effect on EPS) 23
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XXX-YY-50 Disclosure: specific disclosure requirements for a
subtopic. Excludes general disclosure requirements XXX-YY-55
Implementation guidance and illustrations: provides guidance
relating to the standards in simplified and generalized situations.
XXX-YY-60- Relationships: includes references to other subtopics
that may contain guidance related to the subtopic XXX-YY-65
Transition and open effective date information 24
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XXX-YY-70 - Links to Grandfathered material: the guidance will
be archieved within a database that contain all superseded and
grandfathered literature ( Ex. APB 16 Business Combinations: FASB
141 eliminated the pooling of interest method for all business
combination initiated after June 30, 2001. Entities with pooling
transactions prior to June 30, 2001 shall refer to APB 16 ).
XXX-YY-75 XBRL Definitions SEC Sections SEC content is included for
reference to improve the usefulness of the Codification for public
companies 25
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How to use the Codification: Go to: http://asc.fasb.org View
tutorial: click navigation and content View help pages: click
navigating the codification Navigate the codification using a
selected topic Continue using the ASC for the academic process
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SELECTED TOPIC Go to PRESENTATION (205-299) CLICK Accounting
Changes and Error Corrections Click expand, overall, join all
sections, overall 27
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SELECTED TOPIC: REVENUE View expanded table of content Select a
section or Click overall Click join all sections Overall Navigate
thought a selected topic 28
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Summary & Questions
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Thank you for participating
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References: Ford Caroline O., C. William Thomas, Test Driving
the Codification, Journal of Accountancy, December 2008, Vol. 206,
pg. 62 Heffes Ellen M., Conceptual Framework, Revenue Recognition
Top FASAC Priority List, Financial Executive, December 2006, Vol.
22, pg.14 Pounder Bruce, Framing the Future, Journal of
Accountancy, May 2008, Vol.205,pg.40 Williams Kathy, FASB Wants
Feedback on Codification, Strategic Finance, February 2008, Vol.
89, pg.21 31