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Statement of Standard Accounting Practice 27 - PowerPoint

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					    FASB Accounting Standards
           Codification

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



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                      OBJECTIVES


     To obtain a good understanding of the FASB Standards
      Codification System

     To encourage the use of the Codification Research
      System for research



2
                           House of GAAP
AICPA Accounting           FASB Implementation            Recognized Industry
Interpretations            Guides                         Practices

                       Category D (Least Authoritative)


FASB Emerging Issues Task Force          AICPA AcSEC Practice Bulletins


                                Category C

FASB Technical              AICPA Industry Audit          AICPA Statements of
Bulletins                   and Accounting Guides         Position

                                 Category B

FASB Statements,
                                                             CAP Accounting
Interpretations, and            APB Opinions
                                                            Research Bulletins
Staff Positions
3                  Category A (Most Authoritative)
    Standard Setting                                         Illustration 1-5 User
                                                             Groups that Influence
                             Business Entities               Accounting Standards



    CPAs and                                             Financial
    Accounting Firms                                     Community


    AICPA (AcSEC)                                        Preparers
                                FASB                     (e.g., FEI)


                                                         Government
    Academicians                                         (SEC, IRS, other
                                                         agencies)


    Investing Public                                     Industry
                                                         Associations
                   Accounting standards,
                   interpretations, and bulletins
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           LO 8 Describe the impact of user groups on the standard-setting process.
             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
       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


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     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



7
                          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


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     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.



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      Reassembled the pieces into approximately 90
      topics

      Contents in each topic are further organized first
      by subtopic, then section and finally paragraph.


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      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.




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       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


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       Codification structure, content and styles


      Presentation – Topic codes 205-299 only to presentation matters.


      Financial Statements Accounts – Topic codes 305 -700
       organizes topics in a financial statement order including Assets,
       Liabilities Equity, Revenue, and Expenses. Topics include Receivables,
       Revenue Recognition, Inventory, and so forth.



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      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 905-999 relate to accounting that is unique
       to an industry or type of activity. Topics include Airlines, Software, Real
       State, and so forth.




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           Description of the Sections
                    XXX-YY-ZZ

      XXX – Topic


      YY – Subtopic


      ZZ - Section



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           Sections of each Subtopic
      XXX-YY-00   Status
      XXX-YY-05   Overview and Background
      XXX-YY-10   Objectives
      XXX-YY-15   Scope and Scope Exceptions
      XXX-YY-20   Topical Definitions-Glossary
      XXX-YY-25   Recognition
      XXX-YY-30   Initial Measurement
      XXX-YY-35   Subsequent Measurement


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      XXX-YY-40     Derecognition
      XXX-YY-45     Other Presentation Matters
      XXX-YY-50     Disclosure
      XXX-YY-55     Implementation Guidance and
                   illustrations
      XXX-YY-60     Relationship
      XXX-YY-65     Transition and Other Effective Date
                   information
      XXX-YY-70      Links to Grandfathered Material
      XXX-YY-75      XBRL Definitions

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             Description of the Sections
      XXX-YY-00 - 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




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      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




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      XXX-YY-25 – Recognition: criteria, timing, and
      location(within the financial statements) for recognizing
      a particular item.

      XXX-YY-30 - Initial Measurement: criteria and
      amounts used to measure a paricular item at date of
      recognition.



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      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).




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      XXX-YY-40 - 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)




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      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

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      XXX-YY-70 - 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, 2001. 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


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           How to use the Codification:
      Go to: http://asc.fasb.org
      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




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                         SELECTED TOPIC

      Go to PRESENTATION (205-299)


      CLICK Accounting Changes and Error Corrections


      Click expand, overall, join all sections, overall




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                 SELECTED TOPIC: REVENUE

      View expanded table of content
      Select a section or
      Click overall
      Click join all sections
      Overall
      Navigate thought a selected topic


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Summary & Questions
Thank you for participating
     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
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