Codification Essay

840 Words Oct 9th, 2013 4 Pages
Accounting Standards Codification
Previously, the documents that detailed the rules and regulations of the Generally Accepted Accounting Principles (GAAP) varied in structure, format, and completeness. These variations led to confusion among users and it became more difficult to determine if they were using GAAP correctly. In response to this problem, the FASB developed the Accounting Standards Codification (ASC) whose main purpose is to provide users access to all of the generally accepted accounting principles in one place. The Codification eliminates obsolete information and presents all of the material in the same format and structure. The Codification is now considered the authoritative source for GAAP for all nongovernmental
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In addition to its primary three goals, the Codification is also expected to: reduce the risk of noncompliance through improved documentation, assist FASB with future research efforts, decrease the amount of time to resolve research issues, and supply the most up-to-date information that is concurrent with the Accounting Standards Updates.
The Codification consists of all authoritative literatures that are issued by a standard setter; it does not include the standards for local governments and states. If there is a modification on a particular standard it is not identified as a sole document rather it is stated as an as-amended version of the primary statement. The literature within the Codification includes various topics ranging from the Financial Accounting Standards Board (FASB) to the Emerging Issues Task Force (EITF) to the American Institute of Certified Public Accountants. Within each of these literatures there are more specific topics that are discussed and addressed. The primary goal of the Codification was to simplify the various documents and codify the main standards and regulations. During the codifying process, the Codification eliminated nonessential materials including redundant summaries, previous practices, and historical content. By highlighting the important information, users are able to quickly obtain and understand the necessary material needed.
The Codification provides a topically organized structure that is subdivided into topics,

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