AAA HQ & Digital Services Blog

news and views from AAA headquarters

This is a public blog  publicRSS

blog entry

    New FASB Codification "Hot Topic"
    blog entry posted September 11, 2009 by Tracey Sutherland, last edited February 10, 2012 
    2223 Views, 4 Comments
    title:
    New FASB Codification "Hot Topic"
    body:

    The newest AAACommons "Hot Topic" is a Resource Community for faculty teaching about and studying issues related to the FASB Codification. With the Codification now easily accessible to all accounting faculty and students, this new AAACommons space is for sharing commentaries, discussions, video, working papers, websites, and discussions with colleagues. Click the web link below to discuss and share.

    Comment

     

    • Robert E Jensen

       

      "Could Codification Weaken Internal Controls? Maybe. And here's what you can do to mitigate the effect on your accounting policies, disclosures, and error detection," by Bruce Pounder, CFO.com April 16, 2010 ---
      http://www.cfo.com/article.cfm/14491629/?f=rsspage

      April 17, 2010 reply from Jagdish Gangolly [gangolly@GMAIL.COM]

      Bob,

      I read the article carefully.

      If the author really means to say that codification has added to the costs of financial reporting because of the five effects of codification, I completely agree. However, the author's arguments that codification weakens internal controls are transparently bogus.

      It is true that all references to GAAP requires revision because of codification, and that it requires additional work and entails additional cost. But to say that the impact of codification on internal controls could be to weaken them is like saying that I could make more mistakes and pay more penalties on this years tax return because the tax law changed. Of course you will pay penalties if you don't follow the tax law changes, but you don't have to be careless enough not to know what the changes are.

      Jagdish --
      Jagdish S. Gangolly Department of Informatics College of Computing & Information State University of New York at Albany Harriman Campus, Building 7A, Suite 220 Albany, NY 12222 Phone: 518-956-8251, Fax: 518-956-8247

      April 18, 2010 reply from Bob Jensen

      I agree Jagdish and still think the money and time given FASB Codification is a waste if the SEC does not shoot IFRS convergence down. And the chances of the SEC doing this are almost zero in my opinion. Soon the FASB’s Codification database will be only an expensive accounting history database --- http://www.trinity.edu/rjensen/theory01.htm#MethodsForSetting 
      Codification is a good idea only if we do not abandon FASB standards.

      Another more interesting question will be whether the IASB standards and interpretations can be eliminated as hard copy (and the present electronic reproductions of hard copy) in the same manner that the FASB eliminated hard copy/PDF files with the Codification database. In my opinion, it will be much more difficult to create a codification database for IFRS due to the language and other barriers, including a much more complicated costing and billing problem. The FASB worked out a usage and billing scheme for members of the American Accounting Association. It is much more difficult, however, to reach IFRS educators in remote parts of the world.

      Codification (complete with over a hundred language translations) could be a wonderful thing for international standards But the cost of complete codification is truly immense.

      It will be many years before the IASB and its many constituencies can achieve the efficiencies that are envisioned for the FASB Codification database (that I personally consider a pain in the tail at present). One of my complaints as an educator is the way the Codification database left out many  wonderful teaching illustrations contained in the hard copy versions and revisions of standards and interpretations. FAS 133, FAS 138, and other amendments of FAS 133 contain many examples of wonderful learning illustration losses in the Codification database.

      Bob Jensen

      Bob Jensen's threads on FASB Codification are at
      http://www.trinity.edu/rjensen/theory01.htm#MethodsForSetting

    • 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
      http://www.ey.com/Publication/vwLUAssets/TechnicalLine_BB2208_AICPAAAG_7November2011/%24FILE/TechnicalLine_BB2208_AICPAAAG_7November2011.pd

    • 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)
      http://www.screencast.com/t/K8gruSHTv

      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
      www.askaref.com 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 ---
      http://www.pwc.com/gx/en/comperio/index.jhtml

      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 ---
      http://www.fasb.org/jsp/FASB/Page/PreCodSectionPage&cid=1218220137031
       
      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 --- http://www.cs.trinity.edu/~rjensen/

      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 ---
      http://www.pwc.com/gx/en/comperio/index.jhtml

    • 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) ---
      http://aaajournals.org/doi/full/10.2308/iace-50949

      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 ---
      http://www.trinity.edu/rjensen/Theory02.htm#Impairment