Fasb Codification System Orientation Paper

FASB Codification System Orientation Paper

FASB Codification System Orientation Paper

The Financial Accounting Standards Board (FASB) has created a codification system that combines many separate resources into one system containing Generally Accepted Accounting Principles (GAAP) and other up-to-date information for professionals (FASB, 2010). The purpose of the FASB Codification System was to create a single source of information for non-government entities that would facilitate easier and quicker research on accounting issues for accounting and reporting professionals, analysts, and investors. Decreasing the complexity of accounting standards and principles by creating this database was another goal of the FASB. The system provides easier ways to research information and serves as an authoritative GAAP guide to help decrease the amount of accounting non-compliance because of the lack of understanding and confusion due to all the revised standards and principles. The Codification System contains nine content areas that include: General Principles, Presentation, Assets, Liabilities, Equity, Revenue, Expenses, Broad Transactions, and Industry. Each content area includes topics that relate. A hierarchy exists for each topic. The topic is broken down into subtopics, then sections, and then subsections. For example, the content area “Broad Transaction” contains 14 topics, one of those being “Leases”. The topic “Leases” is broken down into subtopics, which include overall information, operating leases, and capital leases. Next, one can choose from any section that he/she is interested in and even choose a subsection following the choice of section. Under any topic, one can find all the principles and standards from the FASB and The Securities Exchange Commission, (SEC) that applies to that topic and would affect the way that issue is treated. The sections cover recognition, disclosures, scopes, measurements, and other nature of the content with the subsections...