FASB took another step forward in its plan to codify U.S. GAAP with the release Friday of an exposure draft on changes to the GAAP hierarchy.
FASB is taking comments on the proposal until May 8. In the draft, the standard setter reiterates the planned July 1 effective date for the FASB Accounting Standards Codification to become the single source of authoritative U.S. accounting and reporting standards, except for SEC rules and interpretive releases.
The 20-page proposal would modify FASB Statement no. 162, The Hierarchy of Generally Accepted Accounting Principles . The proposal would establish only two levels of GAAP—authoritative and nonauthoritative.
As of July 1, the FASB Accounting Standards Codification (ASC) would supersede all then-existing, non-SEC accounting and reporting standards for nongovernmental entities. The FASB ASC disassembled and reassembled thousands of nongovernmental accounting pronouncements (including those of FASB, the Emerging Issues Task Force, and the AICPA) to organize them under roughly 90 topics and include all accounting standards issued by a standard setter within levels A–D of the current U.S. GAAP hierarchy. The ASC also includes relevant portions of authoritative content issued by the SEC, as well as selected SEC staff interpretations and administrative guidance issued by the SEC.
FASB points out in the exposure draft that it decided to include in the codification the AICPA Technical Inquiry Service (TIS) Section 5100, Revenue Recognition, paragraphs 38–76, which may result in an accounting change for private entities that had not previously applied the guidance. FASB provided specific transition provisions for private entities affected by the change.
Visit the AICPA Web site’s GAAP Codification page to review resources related to the codification project.