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    Bill Black
    Did you intend for the Codification to change accounting...
    question posted August 1, 2011 by Bill Black, last edited February 24, 2012 
    1844 Views, 4 Comments
    Did you intend for the Codification to change accounting education, or is that a bonus?

    You have been seen as a strong supporter of the Accounting Codification. These days, with authoritative databases available for use during the CPA exam, students have to use research skills rather than rote memorization to find the appropriate answers. Accounting educators have had to modify the way they teach about accounting pronouncements. Did you envision the shift towards teaching research skills as you worked to make the Codification a reality?



    • Robert E Jensen

      From Ernst & Young on November 10, 2011

      Technical Line: AICPA health care audit and accounting guide undergoes major surgery

      The American Institute of Certified Public Accountants (AICPA) issued a comprehensive revision of its Audit and Accounting Guide, Health Care Entities, for the first time in 15 years. The new Guide, issued last month, contains incremental health care accounting guidance from the Codification, addresses health care industry implementation practices and provides illustrative interpretations of auditing considerations. It also includes recommendations from the Financial Reporting Executive Committee (FinREC) on accounting, reporting and disclosure treatment of some transactions or events that are not included in the Codification and FinREC's preferences for certain practices when authoritative guidance is subject to interpretation. Our
      Technical Line publication highlights the major changes and recommendations.

      That link is --- Click Here

    • Robert E Jensen

      Resistance is Futile


      Teaching Case on How IFRS Resistance Was Futile All Along:  A Revenue Bonanza for CPA Firms, the AICPA, and Other Training Providers

      From The Wall Street Journal Accounting Weekly Review in February 24, 2012

      U.S. Nears Accounting Shift
      by: Michael Rapoport
      Feb 21, 2012
      Click here to view the full article on

      TOPICS: FASB, Financial Accounting Standards Board, Financial Reporting, International Accounting Standards, International Accounting Standards Board, SEC, Securities and Exchange Commission

      SUMMARY: James Kroeker of the SEC spoke at an IFRS advisory panel in London on Monday, February 20, 2012. He discussed the SEC's current thinking on adoption of IFRS and the role of the FASB in that system. According to the article, his comments were made "in terms that hinted that he and his staff were gravitating toward a middle-ground 'endorsement' proposal, under which IFRS would be incorporated into U.S. rules and U.S. rule makers would retain the authority to evaluate future global rules for U.S. use."

      CLASSROOM APPLICATION: The article is useful to bring to students' attention the current status of a U.S. shift to global financial reporting standards (IFRS) established by the IASB with review and endorsement by the FASB.

      1. (Advanced) Who establishes International Financial Reporting Standards (IFRS)?

      2. (Advanced) Summarize the status of use of IFRS from comments in this article, augmented by information on the web located at

      3. (Introductory) According to the article, why are "international authorities...pushing the [U.S. Securities and Exchange Commission] to move U.S. companies to use the global rules"? Why do accounting firms and large multinational corporations also support this view?

      4. (Advanced) What is principles-based standard setting? How is this different from the approach generally taken under U.S. Generally Accepted Accounting Principles (U.S. GAAP)?

      5. (Introductory) According to the article, as the U.S. moves to using IFRS, what will become the role of the Financial Accounting Standards Board (FASB)?

      Access the SEC web site at Search for the term "condorsement" through the Search field in the upper right hand. Locate the speech by Deputy Chief Accountant Paul A. Beswick on December 6, 2010, to the AICPA National Conference on Current SEC and PCAOB Developments. Answer the following two questions: What does this coined term "condorsement" mean? What role does this approach imply for the FASB?

      Reviewed By: Judy Beckman, University of Rhode Island

      "U.S. Nears Accounting Shift," by Michael Rapoport, The Wall Street Journal, February 21, 2012 ---

      Regulators are edging closer to switching U.S. companies to global accounting rules, as the Securities and Exchange Commission's top accountant suggested Monday he was moving toward recommending a long-discussed compromise approach.

      International authorities are pushing the SEC to move U.S. companies to use the global rules, known as International Financial Reporting Standards, to unify companies world-wide under the same accounting system. American corporations are watching intently for a recommendation from the SEC's staff about whether the commission should do so. Big accounting firms and multinational companies say a move would simplify their accounting and make it easier for them to raise capital around the world, while skeptics say it would be too costly and burdensome.

      Most companies world-wide now use IFRS, but the U.S. still uses its own set of rules, known as generally accepted accounting principles. IFRS allows companies more flexibility and judgment than GAAP. The global system is centered on applying guiding principles of accounting rather than following GAAP's set of detailed rules.

      The SEC's staff hasn't made a recommendation yet. But on Monday, SEC Chief Accountant James Kroeker discussed the matter in terms that hinted that he and his staff were gravitating toward a middle-ground "endorsement" proposal, under which IFRS would be incorporated into U.S. rules and U.S. rule makers would retain the authority to evaluate future global rules for U.S. use.

      Speaking to an IFRS advisory panel in London, Mr. Kroeker said that the rules to be used globally "would be the standards of the IASB"—the International Accounting Standards Board, which created IFRS—and that the Financial Accounting Standards Board, the U.S. rule maker, would play "an endorsing role."

      Joel Osnoss, Deloitte Touche Tohmatsu Ltd.'s global leader for IFRS, said Mr. Kroeker's remarks "clearly confirm" that he and his staff are heading toward a recommendation that the SEC use IFRS for American companies.

      Continued in article

      Jensen Comment
      ASC = Always (was) Codification Stupidity
      Kiss the FASB's Codification Database goodbye. It was probably a waste of millions of dollars all along.

      Bob Jensen's threads on accounting standard setting controversies ---

      References for Comparisons of IFRS versus U.S. GAAP

      US GAAP versus IFRS: The basics
      2011 Edition, 56 Pages
      Free from Ernst & Young$FILE/IFRSBasics_BB2280_December2011.pdf

      IFRS and US GAAP: Similarities and Differences
      2011 Edition, 238 Pages
      From PwC
      Note the Download button!

      From Deloitte
      Comparisons of IFRS With Local GAAPS
      IFRS and US GAAP
      July 2008 Edition, 76 Pages

      Jensen Comment
      At the moment I prefer the PwC reference
      My favorite comparison topics (Derivatives and Hedging) begin on Page 158 in the PwC reference
      The booklet does a good job listing differences but, in my opinion, overly downplays the importance of these differences. It may well be that IFRS is more restrictive in some areas and less restrictive in other areas to a fault. This is one topical area where IFRS becomes much too subjective such that comparisons of derivatives and hedging activities under IFRS can defeat the main purpose of "standards." The main purpose of an "accounting standard" is to lead to greater comparability of inter-company financial statements. Boo on IFRS in this topical area, especially when it comes to testing hedge effectiveness!

      One key quotation is on Page 165

      IFRS does not specifically discuss the methodology of applying a critical-terms match in the level of detail included within U.S. GAAP.
      Then it goes yatta, yatta, yatta.

      Jensen Comment
      This is so typical of when IFRS fails to present the "same level of detail" and more importantly fails to provide "implementation guidance" comparable with the FASB's DIG implementation topics and illustrations.

      I have a huge beef with the lack of illustrations in IFRS versus the many illustrations in U.S. GAAP.

      I have a huge beef with the lack of illustrations in IFRS versus the many illustrations in U.S. GAAP.

      I have a huge beef with the lack of illustrations in IFRS versus the many illustrations in U.S. GAAP.

    • Robert E Jensen

      ASC = Accounting Standard Codification of the FASB

      January 8, 2013 message from Zane Swanson

      Another faculty person created a video (link follows)

      which introduces the ASC.  This video has potential value at the beginning of the semester to acquaint students with the ASC.  I am thinking about posting the clip to AAA commons.  But, where should it be posted and does this type of thing get posted in multiple interest group areas?

       Any thoughts / suggestions?

      Zane Swanson a handheld device source of ASC information

      Jensen Comment
      A disappointment for colleges and students is that access to the Codification database is not free. The FASB does offer deeply discounted prices to colleges but not to individual teachers or students.

      There are other access routes that are not free such as the PwC Comperio ---

      Hi Zane,
      This is a great video helper for learning how to use the FASB.s Codification database.
      An enormous disappointment to me is how the Codification omits many, many illustrations in the pre-codification pronouncements that are still available electronically as PDF files. In particular, the best way to learn a very complicated standard like FAS 133 is to study the illustrations in the original FAS 133, FAS 138, etc.
      The FASB paid a fortune for experts to develop the illustrations in the pre-codification  pronouncements. It's sad that those investments are wasted in the Codification database.
      What is even worse is that accounting teachers are forgetting to go to the pre-codification pronouncements for wonderful illustrations to use in class and illustrations for CPA exam preparation ---
      Sadly the FASB no longer seems to invest as much in illustrations for new pronouncements in the Codification database.

      Bob Jensen


      Examples of great FAS 133 pre-codification illustrations are as follows:

      [ ]133ex01a.xls 12-Jun-2008 03:50 345K [ ]133ex02.doc 17-Feb-2004 06:00 2.1M [ ]133ex02a.xls 12-Jun-2008 03:48 279K [ ]133ex03a.xls 04-Apr-2001 06:45 92K [ ]133ex04a.xls 12-Jun-2008 03:50 345K [TXT]133ex05.htm 04-Apr-2001 06:45 371K [ ]133ex05a.xls 12-Jun-2008 03:49 1.5M [TXT]133ex05aSupplement.htm 26-Mar-2005 13:59 57K [ ]133ex05aSupplement.xls 26-Mar-2005 13:50 32K [TXT]133ex05d.htm 26-Mar-2005 13:59 56K [ ]133ex06a.xls 29-Sep-2001 11:43 123K [ ]133ex07a.xls 08-Mar-2004 16:26 1.2M [ ]133ex08a.xls 29-Sep-2001 11:43 216K [ ]133ex09a.xls 12-Jun-2008 03:49 99K [ ]133ex10.doc 17-Feb-2004 16:37 80K [ ]133ex10a.xls[TXT]133summ.htm 13-Feb-2004 10:50 121K [TXT]138EXAMPLES.htm 30-Apr-2004 08:39 355K [TXT]138bench.htm 07-Dec-2007 05:37 139K [ ]138ex01a.xls 09-Mar-2001 13:20 1.7M [TXT]138exh01.htm 09-Mar-2001 13:20 31K [TXT]138exh02.htm 09-Mar-2001 13:20 65K [TXT]138exh03.htm 09-Mar-2001 13:20 42K [TXT]138exh04.htm 09-Mar-2001 13:20 108K [TXT]138exh04a.htm 09-Mar-2001 13:20 8.2K [ ]138intro.doc 09-Mar-2001 13:20 95K [TXT]138intro.htm 09-M

      Others ---

      Jensen Comment
      A disappointment for colleges and students is that access to the Codification database is not free. The FASB does offer deeply discounted prices to colleges but not to individual teachers or students.

      There are other access routes that are not free such as the PwC Comperio ---

    • Robert E Jensen

      "Using the Codification to Research a Complex Accounting Issue: The Case of Goodwill Impairment at Jackson Enterprises," by Casey J. McNellis, Ronald F. Premuroso, and Robert E. Houmes , Issues in Accounting Education, Volume 30, Issue 1 (February 2015) ---

      This case is designed to help students develop research skills using the Financial Accounting Standards Board's (FASB) Accounting Standards Codification (Codification or ASC). The case also helps develop students' abilities to analyze and recommend alternatives for a complex accounting issue, goodwill impairment, which is very relevant in today's business world. This case can be used in an undergraduate or graduate accounting class, either in groups of students or as an individual student project.

      . . .

      Shortly after the case was tested in the graduate course, it was administered to undergraduate students enrolled in an Intermediate I course (n = 50). These students had learned the basics of the two-step impairment test in the week preceding the assignment of the case. As indicated in Table 1, the undergraduate class averaged 57.33 percent on the six-question post-case assessment. These students did not receive the six-question assessment prior to reading the case. This was done partially out of necessity because of the time constraints imposed by the intermediate-level curriculum. The Intermediate I course contains a fixed amount of material that must be learned by students prior to their enrollment in the Intermediate II course.7 Given the demands of the curriculum, the instructor only had a portion (approximately 60 minutes) of one class period in which to devote to the case. This class period was used to discuss the case and to administer the case-related survey items (see paragraph below) after the students read the case and answered the case requirements.8 However, given the pre-test scores that we observed in the graduate class, we also felt this course of action was appropriate, as it was deemed unlikely that the undergraduate students' pre-case knowledge of the in-depth issues would be greater than the graduate students, who had already taken the Intermediate I course. As such, we believe the undergraduate post-case assessment average provides additional evidence of the efficacy of this case.

      After the case study was completed and the results and the answers to the case study were discussed and reviewed with the students in each respective class, the instructors had each student complete a five-question survey found in Appendix A. The results of the survey are summarized in Table 2. In general, the mean responses to the five survey questions exceeded 4 on a scale of 1 (disagree) to 5 (totally agree) for the students performing this case study.

      Bob Jensen's threads on impairment ---