ARE YOU READY FOR THE NEW FASB
CODIFICATION?
This presentation has not been approved, disapproved, or otherwise acted upon by any senior technical
committees of the AICPA, nor does it represent the views or an official position of the AICPA. This
presentation is not intended as legal, accounting, or other professional advice and should not be relied upon
as such.
© 2009 The American Institute of Certified Public Accountants
What is the Codification?
What is the Codification?
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The source of authoritative US GAAP recognized by
FASB to be applied by all nongovernmental entities
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An effort to reduce the complexity of accounting
standards and to facilitate international
convergence.
 The effort resulted in a major restructuring of
accounting and reporting standards.
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Level A–D:
U.S. GAAP (previously issued by a standard setter) was
codified into a topically organized format
(approximately 90 topics).
Goals of the Codification
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Simplify user access to all authoritative U.S. GAAP
-Reduce the amount of time and effort required to
solve an accounting research issue
-Mitigate the risk of noncompliance with standards
through improved usability of the literature
-Provide accurate information with real-time updates
as new standards are released
Goals of the Codification (cont.)
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Assist FASB with the research and international
convergence efforts required during the standardsetting process
Become the authoritative source of literature for the
completed eXtensible business reporting language
(XBRL) taxonomy
Clarify that guidance not contained in the Codification
is not authoritative
See the FASB’s Codification Notice to Constituents for a
full discussion on the goals of the Codification.
Why Codify U.S. GAAP?
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Constituent concern was that U.S. GAAP was overly
confusing and difficult to research.
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Multiple types of standards, multiple standard
setters, multiple indexing schemes, and different
levels of authority made it difficult to ensure
completeness of all relevant guidance and accuracy
of its application to an accounting issue.
Codification Content
Codification Content
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Includes authoritative guidance (for example,
standards sections, implementation guidance, and
so on)
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Excludes content deemed redundant or nonauthoritative (for example, much of basis for
conclusions)
Codification Content (cont.)
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The following literature is included in the
Codification:
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FASB Statements, Interpretations, Technical Bulletins, Staff
Positions, Staff Implementation Guides, and Statement No. 138
Examples
EITF Abstracts and Topic D
Derivative Implementation Group Issues
Accounting Principles Board Opinions
Accounting Research Bulletins
FASB Accounting Interpretations
AICPA Accounting Statements of Position, Practice Bulletins,
incremental accounting guidance from Audit and Accounting
Guides, and Technical Inquiry Service questions and answers
(for Software Revenue Recognition only)
Select SEC guidance
SEC Content in the Codification
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SEC content is the domain of the SEC.
SEC content is included in Codification topics but in
separate SEC sections.
 SEC guidance is required only for SEC
registrants.
 An “S” precedes any SEC guidance in the
Codification.
SEC material sections include the full text of the relevant
guidance.
SEC sections do not contain the entire population of
SEC rules, regulations, interpretive releases, and staff
guidance.
Codification Structure
How is the
Codification Structured?
Areas (Not Cited)
Topics
Subtopics
Sections
Paragraph
How is the
Codification Structured? (cont.)
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Areas—groupings of topics
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General Principles
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Presentation
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Assets
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Liabilities
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Equity
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Revenue
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Expenses
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Broad Transactions
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Industry
How is the
Codification Structured? (cont.)
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Topics
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Broadest categorization of related content
(for example, FASB ASC 405, Liabilities)
Correlate with IFRS / IAS standards
Subtopics
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Represent subsets of a topic
(for example, FASB ASC 405-20, which discusses
the extinguishment of liabilities)
Generally distinguished by type or scope
How is the
Codification Structured? (cont.)
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Sections
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Represent the nature of the content in a
subtopic.
Examples are recognition, disclosure, and
subsequent measurement.
Correlate with IFRS / IAS sections.
How is the
Codification Structured? (cont.)
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Subsections
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Allow further segregation and navigation of
content.
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Occur in a limited number of cases.
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Unlike sections, subsections are not numbered.
Codification Structure Example
Leases
Topic
Subtopics
Sections
Operating
Leases
Overall
Scope
Lessees
Disclosure
Lessees
Scope
Lessees
Capital
Leases
Disclosure
Lessees
Scope
Lessees
Disclosure
Lessees
Subsections
Lessors
Lessors
Lessors
Lessors
Lessors
Lessors
Note: This is for illustration only and does not include all Topics, Subtopics, Sections, and Subsections.
A Look at the Codification
How is the
Codification Structured? (cont.)
Example of referencing
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FASB Accounting Standards Codification (ASC)
Topic-Subtopic-Section-Paragraph
FASB ASC 310-10-55-1: ????????????????
A Look at the Cross Reference Tool
A Look at the Cross Reference Tool (cont.)
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Cross Reference Search by Standard Type
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AAG
AIN
APB
ARB
CFRR
DIG
EITF
FAS
FIN
AICPA Audit and Accounting Guide
AICPA Interpretations
APB Opinions
Accounting Research Bulletins
Codification of Financial Reporting Releases
FASB Derivative Implementation Group
Issues
Emerging Issues Task Force
FASB Statements
FASB Interpretations
A Look at the Cross Reference Tool (cont.)
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Cross Reference Search by Standard Type (continued)
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FSP
FTB
IR
PB
QA
SAB
SOP
SX
TIS
FASB Staff Positions
FASB Technical Bulletins
SEC Interpretive Release
AICPA Practice Bulletins
FASB Staff Implementation Guides
SEC Staff Accounting Bulletin
AICPA Accounting Statement of Position
SEC Regulation S-X
AICPA Technical Inquiry Service (only for
software revenue recognition 5100, pars. 38-76)
Resources
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Web sites
Codification site is available at FASB’s site
www.fasb.org
AICPA resources related to the Codification can be
found at
http://www.aicpa.org/Professional+Resources/Acc
ounting+and+Auditing/GAAP+Codification/.
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