Demystifying the Accounting Standards
Codification
Peggy Gallagher, CPA
mgallagher@amper.com
Demystifying the Accounting Standards
Codification
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What is it?
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When is it effective?
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How will it affect me?
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Resources
Overview of the Codification
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FASB’s Accounting Standards Codification (“ASC”)
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Does not change US GAAP
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Integration and categorization
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Includes most SEC content
Why was the ASC needed?
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Simplifies access
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Improves accuracy of research
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Mitigates risk of non-compliance
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Streamlines research process
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Provides real-time updates
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Assists with IFRS convergence
Before the ASC
FASB statements ~ FASB Staff Positions ~ FASB
Interpretations ~ Accounting Principles Board Opinions ~
EITF Abstracts ~ AICPA Audit & Accounting Guides ~ FASB
Technical Bulletins ~ SEC S-X Rules ~ SEC Staff Accounting
Bulletins ~ AICPA Statements of Position ~ SEC S-K Items ~
SEC Speeches ~ AICPA Practice Bulletins
ETCETERA
What’s Not in the ASC
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Governmental standards
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Non-GAAP standards (modified cash basis, income tax
basis or regulatory basis)
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“Non-essential” content of previous standards
 Basis for Conclusions
 Document summary
 Constituent feedback
What’s Not in the ASC (cont.)
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FASB used 12-31-08 as a target date for authoring
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Content amended or superseded by FIN 48, SFAS 141(R)
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Pre-SFAS 158 literature (employers’ accounting for DB
plans)
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Generally, most other grandfathered material
SEC Standards
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“SEC content is the domain of the SEC”
“Relevant” SEC materials included to “increase the utility”
of the ASC, in separate sections
Regulation S-X, Financial Reporting Releases, Accounting
Series Releases, SABs, SEC Staff Observer comments are in
Content related to the following is EXCLUDED:
 MD & A
 Auditing matters
 Independence matters
How the ASC is Structured
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New citations: “ASC 210-20-60-5” or ASC XXX-YY-ZZ-PP
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New classification system
 Areas – 5 groupings of topics
 Topics = XXX = 210
 Subtopics = YY = 20
 Sections = ZZ = 60
 Paragraph or subsections = P or PP = 5
ASC Areas and Topics (“XXX”)
Approximately 90 topics, in 5 main areas
 General Principles (105 – 199)
• Example: 105, GAAP
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Presentation (205 – 299)
• Balance sheet, Statement of Cash Flows, EPS
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Financial Statement Accounts (305 – 700)
• Receivables, Equity, Revenue Recognition
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Broad Transactions (805 – 899)
• Leases, Business Combinations, Consolidation
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Industry ( 905 – 999)
Topic – “Broad Transactions”
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805
808
810
815
820
825
830
835
840
845
850
852
855
860
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Business Combinations
Collaborative Arrangements
Consolidation
Derivatives and Hedging
Fair Value Measurements and Disclosures
Financial Instruments
Foreign Currency Matters
Interest
Leases
Nonmonetary Transactions
Related Party Disclosures
Reorganizations
Subsequent Events
Transfers and Servicing
Topic – “Presentation”
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205
210
215
220
225
230
235
250
255
260
270
272
275
280
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Presentation of Financial Statements
Balance Sheet
Statement of Shareholder Equity
Comprehensive Income
Income Statement
Statement of Cash Flows
Notes to Financial Statements
Accounting Changes and Error Corrections
Changing Prices
Earnings per Share
Interim Reporting
Limited Liability Entities
Risks and Uncertainties
Segment Reporting
ASC Subtopics (“YY”)
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Distinguished by type or scope
All will contain “Overall” – pervasive guidance for topic
Remainder will vary by topic
Example
Topic: Leases
Subtopics: Overall, Operating, Capital
ASC Sections (“ZZ”)
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Standardized across all Subtopics
16 categories, examples:
 00, Status
 05, Overview and Background
 15, Scope and Scope Exceptions
 25, Recognition
 50, Disclosure
 SEC: “S” before Section number, i.e., S
USER TIP
Select the feature “Join all Sections” in order to combine each
element of this backbone into one, seamless discussion
Example: Join the Disclosure section for all subtopics within
the Revenue Recognition Topic
USER TIP
Q: How will I be able to find the original source (old
standards) of the ASC material?
A: The Codification includes a cross-reference report that
allows users to identify where current standards reside in
the Codification, or the source of material included in the
Codification. (see example)
Future Codification Updates
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Accounting Standard Updates or “ASUs”
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Numbered by year of issuance, ASU 2009-01 or ASU 0901
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15 issued since July 1, 2009
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Several “Proposed ASUs”
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Same look and feel as pre-ASC standards
Codification Updates
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Current and transitional text presented together in ASC
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Transitional text = not yet effective
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Transitional text will be distinguished from current
(authoritative) text
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FASB does not consider them authoritative as an ASU (no
references to ASU 2009-10)
FASB Exposure Draft Information
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FASB.org
Similar format to ASUs
Click on “Projects” tab, then “Exposure Drafts”
Sign up for “Action Alerts” :
 Send an email to joinactionalert@listserv.lists.fasb.org
 confirmation email will be sent back to you
 all newly issued ASUs, Exposure Drafts and FASB
Activity will be emailed to you
Before and After
“Old” citation
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SFAS 5
SFAS 109/FIN 48
SFAS 142
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SFAS 157
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“New” ASC Citation
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ASC 450, Contingencies
ASC 740, Income Taxes
ASC 350 Intangibles –
Goodwill and Other
ASC 820 Fair Value
Measurements and
Disclosures
Before and After
OLD
SOP 94-6, Significant
Risks & Uncertainties
FAS 141(R), Business
Combinations
SFAS 123(R)
NEW
ASC 275, Risks &
Uncertainties
ASC 805 Business
Combinations
ASC 718 , Compensation
– Stock Compensation
Afraid to Change?
Two ways of linking ASC materials to old standards:
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Cross reference tool
Select “Printer friendly with Sources” view
Effective Date
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Became authoritative on July 1, 2009
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Mandatory for interim and annual periods ending AFTER
September 15, 2009
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For public companies: Q3
Accounting Citations – Going Forward
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Periods ending before September 15, 2009:
 Do NOT refer to ASC only
 May use “old” references only, or both
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Periods ending after September 15, 2009:
 Refer to ASC only, may NOT use “old” references
 Comparative statements: may use both
USER TIP
Streamline: remove unnecessary, outdated technical
references in footnotes
Consider:
deleting all technical citations in favor of a “Plain
English” approach (recommended)
Example: “….as required by the Derivatives and Hedging
Topic of the FASB ASC…”
Not Just for Financial Reports
Other documents impacted by ASC:
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Internal policy manuals, memos, etc
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Management’s Discussion and Analysis (MD&A) (public
companies only)
Transition Planning
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ASC structure requires practice and training
Old standards may be split across several topics
Review financial statements and identify where changes
are needed
Update all internal policies, memos, etc.
Determine how you will access the Codification
Resources
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FASB website (www.fasb.org)
FASB on-line tutorials (free)
FASB “Notice to Constituents” for ASC (free)
FASB online ASC annual subscription, $850; print (4
volumes), $195
AP & M website
QUESTIONS ?????????
“The material contained in this presentation is for general
information and should not be acted upon without prior
professional consultation.”