How to Become a GAAP Geek

Now open to public scrutiny, FASB's codification tool is a one-stop shop for both accounting experts and newbies.
Sarah JohnsonJanuary 17, 2008

The Financial Accounting Standards Board has unveiled what it believes to be the official GAAP rulebook, pending verification by its constituents. Instead of an unwieldy, leather-bound document of tens of thousands of pages, the text is presented on a new website that can be searched and easily reviewed.

After working on its codification project for almost six years, the accounting oversight board now is asking users of generally accepted accounting principles to play with the new tool and point out any missing rules within the year. The board has pulled text from its own standards as well as those from the American Institute of Certified Public Accountants, the Emerging Issues Task Force, and the Securities and Exchange Commission.

The tool isn’t just for accounting experts. Anyone can visit the site for free and, after plugging in basic identifying information, search the site.

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Without such an organized place for GAAP, accountants looking up an obscure rule may be at a loss as to which guidance to follow or which standard-setter they should turn to for an answer. With the new codification — which FASB expects to finalize sometime in 2009 — the answers to hard accounting questions should be more easy to track down.

FASB considers the project “a major restructuring of accounting and reporting standards.” However, that’s not to say the new system changes GAAP. It merely reorganizes all of the literature into about 90 topics and presents them in an easy-to-use, consistent format. FASB’s intent is to reduce some of the complexity in the U.S. financial reporting system.

Users who try out the tool and who may provide feedback electronically are cautioned not to rely on any of the text as authoritative GAAP during the one-year verification period. They must click a box saying they agree with such a statement before receiving their log-in information by e-mail.

Still, the new tool could be used as a starting point for looking up standards. FASB advises users to “verify research results using their existing resources for the currently effective literature.”

They may also want to reference FASB’s 52-page document “Notice to Constituents,” which explains how to use the tool. In it, FASB explains that standards that will be outdated or superseded by December 31, 2008, are not included and neither are rules published after June 1, 2007, except for the newly issued FAS 141(R),Business Combinations.