FASB prepares GAAP codification cleanup for comment

FASB has agreed to move ahead with more than 30 proposed updates to the guiding document known as the codification that underpins GAAP.  

The board set a 90-day comment period for the proposed changes and voted to move forward to draft the updates for a vote by written ballot, according to material outlining FASB’s tentative decisions posted on its website after its Sept.18 meeting. 

The planned changes are intended to “clarify the Codification or correct unintended consequences” of GAAP but “they are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities,” FASB spokesperson Christine Klimek wrote in a statement. 

The codification is effectively the bible for GAAP. The online document was launched in 2009, replacing a paper-based system by which FASB issued printed copies of each accounting standard which were numbered in chronological order.  

The document is now the single source of authoritative nongovernmental U.S. GAAP and supersedes all other accounting literature that isn’t included in it, according to FASB. The codification is continuously updated.  

The changes proposed range from clarifications of such issues as comparative financial statement requirements, as well as the sale or transfer of receivables from contracts to updates related to the calculation of the reference amount for beneficial interests so as to include the allowance for credit losses, according to FASB’s outline of the board’s tentative decision. 

Some of the changes drew concern last year when they first emerged in the process, with several stakeholders pointing out that certain updates could cause confusion.