Impact of FASB's Accounting Standards Codification on Filings by U.S. Public Companies
Originally published September 1, 2009
Keywords: Statement of Financial Accounting
Standards No. 168, FASB, reporting standards, compliance, financial
statements, disclosure documents, SEC,
On June 30, 2009, the Financial Accounting Standards Board (the
"FASB") adopted Statement of Financial Accounting
Standards No. 168, The FASB Accounting Standards
CodificationTM and the Hierarchy of Generally Accepted
Accounting Principles – a replacement of FASB Statement
No. 162 (the "FASB Codification"). In short, the
purpose of the FASB Codification was to reorganize all existing
U.S. accounting and reporting standards issued by the FASB and
other related private-sector standard setters into one
authoritative body of literature, which will ease research of
accounting literature and reduce the risk of
noncompliance.1 Going forward, all revisions will be
made in real time to the FASB Codification. The FASB Codification
is effective for all financial statements issued for interim and
annual periods ending after September 15, 2009.
As a result of the adoption of the FASB Codification, all
references2 in public company financial statements and
related footnotes will be to the classification system set forth in
the FASB Codification, rather than to the applicable previously
existing literature.3 Conforming changes will also need
to be made throughout a company's disclosure documents, with
changes most likely arising in the Management's Discussion and
Analysis of Financial Condition and Results of
Operations4 and, most particularly, in the discussion of
critical accounting policies usually contained in that discussion.
Accordingly, the entire next Quarterly Report on Form 10-Q (the
third quarter report for calendar year-end companies) and the
entire next Annual Report on Form 10-K will need to be carefully
reviewed to ensure that all appropriate changes are made.
Finally, on August 18, 2009, the Securities and Exchange
Commission published interpretive guidance titled "Commission
Guidance Regarding the Financial Accounting Standards Board's
Accounting Standards Codification."5 In its
guidance, the SEC states that concurrent with the Effective Date,
references in the SEC's rules and SEC staff guidance to
specific standards under U.S. generally accepted accounting
principles should be understood to mean the corresponding reference
in the FASB Codification. The SEC also states that the FASB
Codification does not supersede any SEC rules or regulations and is
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