- Concurrent with the effective date of the FASB Codification, references in the Commission’s rules and staff guidance to specific standards under U.S. GAAP should be understood to mean the corresponding reference in the FASB Codification.
- …[T]he FASB Codification includes a cross-reference finding tool that can assist users in identifying where previous accounting literature resides in the Codification.
- The Commission and its staff also intend to embark on a longer term rulemaking and updating initiative to revise comprehensively specific references to specific standards under U.S. GAAP in the Commission’s rules and staff guidance.
- It should be noted that although the FASB has stated that the FASB Codification supersedes existing references in U.S. GAAP, the FASB Codification does not supersede Commission rules or regulations. We understand that the FASB Codification, as a service to users, includes references to some Commission rules and staff guidance. However, the FASB Codification is not the authoritative source for such content, nor does its inclusion in the FASB Codification affect how such content may be updated in the future.
The SEC's Division of Corporation Finance has been receiving a "surprisingly" large number of questions recently on the new codification of accounting standards, noted Wayne Carnall, the division's chief accountant. What most people want to know, he said, is whether they have to amend existing filings, so that references to specific standards using the old numbering system are replaced with references to their new groupings by topic under the codification, which took effect July 1.
The answer is that they don't. Only filings made for periods ending after September 15 must refer to the standards as they're newly codified. But what Carnall finds bothersome is that the question needs to be asked at all. "You should not be making references to specific standards that very few [users of financial statements] understand," he said. Disclosures can be greatly improved and simplified by clearly expressing the concept the preparer is trying to communicate, as opposed to citing a
Carnall spoke during a panel discussion of complexity in financial reporting hosted by the American Institute of Certified Public Accountants. He said that when it comes to simplifying financials, while "standard setters and regulators can do a lot," the onus is also on individual filers and their auditors. "Don't write documents just to protect yourself from litigation or to satisfy a regulator," he said. "Think about the user."
(Separately, additional reporting on the Global Accounting Alliance can be found in Accounting Leaders Discuss Simplifying Financial Reporting by Alexandra Defelice in the AICPA JofA.)
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