Impact of FASB's Accounting Standards Codification on Filings by U.S. Public Companies

Originally published September 1, 2009

Keywords: Statement of Financial Accounting

Standards No. 168, FASB, reporting standards, compliance, financial

statements, disclosure documents, SEC,

On June 30, 2009, the Financial Accounting Standards Board (the

"FASB") adopted Statement of Financial Accounting

Standards No. 168, The FASB Accounting Standards

CodificationTM and the Hierarchy of Generally Accepted

Accounting Principles – a replacement of FASB Statement

No. 162 (the "FASB Codification"). In short, the

purpose of the FASB Codification was to reorganize all existing

U.S. accounting and reporting standards issued by the FASB and

other related private-sector standard setters into one

authoritative body of literature, which will ease research of

accounting literature and reduce the risk of

noncompliance.1 Going forward, all revisions will be

made in real time to the FASB Codification. The FASB Codification

is effective for all financial statements issued for interim and

annual periods ending after September 15, 2009.

As a result of the adoption of the FASB Codification, all

references2 in public company financial statements and

related footnotes will be to the classification system set forth in

the FASB Codification, rather than to the applicable previously

existing literature.3 Conforming changes will also need

to be made throughout a company's disclosure documents, with

changes most likely arising in the Management's Discussion and

Analysis of Financial Condition and Results of

Operations4 and, most particularly, in the discussion of

critical accounting policies usually contained in that discussion.

Accordingly, the entire next Quarterly Report on Form 10-Q (the

third quarter report for calendar year-end companies) and the

entire next Annual Report on Form 10-K will need to be carefully

reviewed to ensure that all appropriate changes are made.

Finally, on August 18, 2009, the Securities and Exchange

Commission published interpretive guidance titled "Commission

Guidance Regarding the Financial Accounting Standards Board's

Accounting Standards Codification."5 In its

guidance, the SEC states that concurrent with the Effective Date,

references in the SEC's rules and SEC staff guidance to

specific standards under U.S. generally accepted accounting

principles should be understood to mean the corresponding reference

in the FASB Codification. The SEC also states that the FASB

Codification does not supersede any SEC rules or regulations and is

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