The Codification

The Codification: Purpose

The Codification was created to help systematize the research of accounting and reporting standards by consolidating the U.S. General Accepted Accounting Principles (US GAAP) into a reliable online search tool. It is a tool that efficiently simplifies the researching process of authoritative standards. The database is also often updated with accurate information and the website constantly takes feedback from its users to improve itself.

The Codification: History

Over 50 years ago, there was a rapid increase in the number of standards created by many different “standard setters”. The lack of consistency and organizational structure of the growing number of accounting and reporting standards made it difficult for many to efficiently solve accounting research issues. Many users voiced their concerns about the structure being both hard to use and understand. Due to the disorganization, constituents felt that their research would require a considerable amount of time and effort, but the information being obtained from the resources was not sufficient enough. This problem did not go unnoticed by the Financial Accounting Standards Board (FASB) who created a project to address the concerns. In 2004, the project was approved by the Trustees of the Financial Accounting Foundation. This project would eventually be the Accounting Standards Codification Research System, also known as “The Codification”.

When the project first started, the FASB project team surveyed many stakeholders about the US GAAP. The survey results showed that many said the US GAAP was confusing and required excessive research. They had positive feedback from the 1,400 respondents when asked if The Codification would aid them in their research. With the information obtained from the survey, the FASB project team was able to design a research system that consolidated the existing standards, was more organized, and efficient. For the interim and annual periods ending after September 2009, The Codification was available for use.

The Codification: Structure

The main structure of The Codification is organized by topic, subtopic, sections, and paragraphs.

There are six topics - with their own range of topic codes - which consists of the following:

1. General Principles (105-109)

2. Presentation (205-299)

3. Assets (305-399)

Liability (405-499)

Equity