Today, practitioners have a new story to read about.

Led by the Trustees of the Financial Accounting Foundation, the oversight board of the Financial Accounting Standards Board (FASB), the GAAP overhaul was intended for one main purpose: to streamline the standards so all practitioners could work from a more manageable set of practices that reduced confusion and boosted transparency. After four years and $16 million, FASB gave the thumbs up to the Accounting Standards Codification (ASC), also known as Codification, and set off a positive ripple effect for accountants in several key areas.

Codification alters the way accountants conduct GAAP research. Before Codification, the standards were cumbersome and painful to navigate, and mistakes (several of which led to misdeeds) were many. With Codification, the standards are reorganized, allowing easier navigation and interpretation. Further, an online searchable database, known as the FASB Accounting Standard Codification Research System (FASCRS), gives practitioners a quick reference guide and simpler navigation because thousands of pages are organized into one integrated, concise document. The database is divided into about 90 topics and further arranged by subtopic, section and

subsection. This organizational system is designed to save practitioners hours (and hours and hours) of time on research and interpretation.

In addition, Codification alters the GAAP hierarchy by shifting from an audit focus to an entity focus, which in essence reduces the number of GAAP levels from four to two. These levels are named authoritative and non-authoritative, and their denotations are just as easy to remember: authoritative sources are found within the Codification; non-authoritative sources are not.

As Winford Paschall, director of third-party CPE relations for Thomson Reuters explains, “Under this new Codification, the doubt is removed because the Codification is authoritative.”

Preparing for International Standards
In addition to simplifying information and saving hours of research, one of the biggest advantages of Codification is that it aligns with the requirements for International Financial Reporting Standards (IFRS), should this become the de facto standard. While the IFRS is under evaluation by the Securities and Exchange Commission (SEC), the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB),