The Reasons Fasb Released Accounting Standards Codification

Synthesis – MODULE 6

The articles in the reading set mainly talk about FASB codification and the guidance of using it. This set of reading can be divided into three groups: (1) the reasons FASB released accounting standards codification; (2) benefits of FASB accounting standard codification. (3) guidance of using FASB accounting codification.  The articles together give me a general view about FASB new released accounting standards codification and a detailed instruction of its structure and how to use it.

The reasons FASB Released Accounting Standards Codification

Both “ GAAP Update Service” (2009) and “ Test-Driving the Codification” (2008) demonstrate that the new released accounting standards codification is a project launched to address the issues of efficient access to nongovernmental U.S GAAP. With the FASB’s codification system, accountants would have a much easier and faster access if they want to find the reference or related accounting standards to solve the questionable problems. Also the codification system is a start of converges of the U.S accounting standards and IFRS.

Benefits of FASB Accounting Standards Codification

    As mentioned above, both articles “ GAAP Update Service” (2009) and “ Test-Driving the Codification” (2008) demonstrate the simplicity of the access the nongovernmental U.S GAAP. The FASB codification team has worked with several regulation agents, for instance, American Institute of Certified Accounts (AICPA) and the Securities and Exchange Commission (SEC) to do a research on a model that would put all U.S. authoritative accounting standards into a U.S. GAAP system. Besides, the codification was categorized into a more tiered structure, which breaks into five parts: area, topic, subtopic, sections and paragraphs. Moreover, the new released codification system would supersede existing authoritative literature. This leads to one of the main benefits of the codification system: save accountants and financial statement preparer and user a lot of time in researching U.S. GAAP issues.

Other benefits of the FASB accounting standard codification include, immediate access to new guidance; reduced risk that a piece of literature may be overlook; more consistent structure to facilitate research and context inclusion for a more complete understanding of the literature.

The facts also support the easy access and convenience of the codification system, in “ Test-Driving the Codification”(2008), it mentions that the feedbacks to FASB so far are extremely position, and most of comments are “content-related rather than general or system-related”, and in a user-friendly research in a senior-level undergraduates in a university, most of the students prefer codification research system than FARS.