 What the FASB’s GAAP Codification Means for CPAsBy Randy Fletchall, CPAChairman, AICPA Board of DirectorsMany CPAs have observed that the proliferation of the collective body of generally accepted accounting principles in the U.S. has contributed to complexity in financial reporting. There has been a hierarchy of GAAP to follow, with a multitude of pronouncements from multiple sources to consider in evaluating the appropriate accounting treatment. But, thankfully, that’s about to change. On Jan. 15, the Financial Accounting Standards Board released the FASB Accounting Standards Codification and related online Codification Research System. The Codification promises to organize the enormous body of accounting standards in a manner that makes GAAP more understandable and easier to use. It is not a rewrite of GAAP, nor does it add or delete any standards. Instead, it takes the existing GAAP pronouncements from the FASB, the Emerging Issues Task Force, the AICPA’s Accounting Standards Executive Committee, and other sources, and organizes them into roughly 90 topics using a consistent structure. The Codification essentially flattens the hierarchy and puts the more than 2,000 pronouncements from various sources all in one place. Once it is adopted during the first half of 2009, the Codification will be the sole source of non-SEC authoritative GAAP. The AICPA has praised the FASB for its Codification project. Not only will it reduce the time and effort required to research accounting issues, but it also will reduce the risk of noncompliance with standards, provide real-time updates, assist with international convergence and serve as the authoritative reference source for the U.S. GAAP XBRL taxonomy. As the Codification applies to all CPAs, whether preparers, auditor, tax practitioners, financial statement users, academics or students, I urge you to acquaint yourself with it. Access is free during the year-long verification period (register at http://asc.fasb.org). The best way for the final codification to be complete, effective, efficient and consistent is for you to use it and provide input! The AICPA also will be providing the FASB with comments on the codification. The PCPS Technical Issues Committee which monitors standard setting from the small firm perspective will submit a comment letter this spring that will include TIC’s comments as well as those from other AICPA staff and committee members. Because the Codification represents such a major change, the AICPA and state CPA societies are committed to helping CPAs understand and implement the new system. Overall education efforts will include case studies on practical applications; screen shots illustrating how the Codification works; explanation s of how this new resource will change the way CPAs do research; and how-to sessions on the basics of using the Codification. Specifically, look for these resources: - An explanatory article in the AICPA’s May Journal of Accountacy. - Numerous articles in various AICPA and state society publications will cover the changes and implementation over the coming months. - Continuing professional education opportunities will be released this spring and summer, including a four-hour live seminar; a self-study version of the course; and an online CPExpress program. - A free AICPA Webcast on May 15 that highlighted key points. The Webcast was archived for those who missed the initial presentation. For more information or to view this webcast, visit www.cpa2biz.com/webcasts - Special targeted information prepared for the various work environments of CPAs (public practice, business & industry, government and education) so they get the specific guidance they need.
This major project is an exciting and positive development for the profession- and one of the ways in which complexity in the US financial reporting system can be reduced. I encourage each of you to take a look at the Codification, provide any comments and stay tuned for more information on how to navigate the transition.
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