1. FASB Accounting Standards Codification
Prof. Sonia Feliciano, CPA
Workshop to: Accounting Professors
UPR Bayamón
March 27, 2009

2. OBJECTIVES
To obtain a good understanding of the FASB Standards Codification System
To encourage the use of the Codification Research System for research

3. CAP Accounting Research Bulletins
House of GAAP
AICPA Accounting Interpretations
FASB Implementation Guides
Recognized Industry Practices
Category D (Least Authoritative)
FASB Emerging Issues Task Force
AICPA AcSEC Practice Bulletins
Category C
FASB Technical Bulletins
AICPA Industry Audit and Accounting Guides
AICPA Statements of Position
Category B
FASB Statements, Interpretations, and Staff Positions
APB Opinions
CAP Accounting Research Bulletins
Category A (Most Authoritative)

4. FASB Accounting standards, interpretations, and bulletins
Standard Setting
Business Entities
Illustration 1-5 User Groups that Influence Accounting Standards
CPAs and
Accounting Firms
Financial
Community
AICPA (AcSEC)
FASB
Preparers (e.g., FEI)
Academicians
Government (SEC, IRS, other agencies)
Investing Public
Industry
Associations
Accounting standards, interpretations, and bulletins
LO 8 Describe the impact of user groups on the standard-setting process.

5. 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
The main areas where there are changes to the Methodology are listed on the slide.
We will go through each of these in detail, but will pick each of them up in context as we run through the audit approach.

6. 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

7. The FASB’s 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

8. 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

9. 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.

10. Reassembled the pieces into approximately 90 topics
Contents in each topic are further organized first by subtopic, then section and finally paragraph.

11. 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.

13. 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

14. Codification structure, content and styles
Presentation – Topic codes only to presentation matters.
Financial Statements Accounts – Topic codes
organizes topics in a financial statement order including Assets, Liabilities Equity, Revenue, and Expenses. Topics include Receivables, Revenue Recognition, Inventory, and so forth.

15. 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 relate to accounting that is unique to an industry or type of activity. Topics include Airlines, Software, Real State, and so forth.

16. Description of the Sections XXX-YY-ZZ
XXX – Topic
YY – Subtopic
ZZ - Section

17. Sections of each Subtopic
XXX-YY Status
XXX-YY Overview and Background
XXX-YY Objectives
XXX-YY Scope and Scope Exceptions
XXX-YY Topical Definitions-Glossary
XXX-YY Recognition
XXX-YY Initial Measurement
XXX-YY Subsequent Measurement

18. XXX-YY-40 Derecognition
XXX-YY Other Presentation Matters
XXX-YY Disclosure
XXX-YY Implementation Guidance and
illustrations
XXX-YY Relationship
XXX-YY Transition and Other Effective Date
information
XXX-YY Links to Grandfathered Material
XXX-YY XBRL Definitions

19. Description of the Sections
XXX-YY 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

20. XXX-YY-15 – Scope and Scope Exceptions: outlines the items( for ex
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

21. XXX-YY-25 – Recognition: criteria, timing, and location(within the financial statements) for recognizing a particular item.
XXX-YY Initial Measurement: criteria and amounts used to measure a paricular item at date of recognition.

22. 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).

23. XXX-YY 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)

24. 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

25. XXX-YY 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, 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

26. How to use the Codification:
Go to:
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

27. SELECTED TOPIC Go to PRESENTATION (205-299)
CLICK Accounting Changes and Error Corrections
Click expand, overall, join all sections, overall

28. SELECTED TOPIC: REVENUE
View expanded table of content
Select a section or
Click overall
Click join all sections
Overall
Navigate thought a selected topic

29. Summary & Questions

30. Thank you for participating

31. 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