How To Navigate Accounting Requirements Professionally?

How To Navigate Accounting Requirements Professionally?

 

In your professional life, you found yourself asking why compliance with US GAAP is so difficult? The truth is this accounting framework evolved over the long period of time starting from early 20th century.

Where to find US GAAP requirements?

The best source for the relevant requirements is fasb.org. Anyone can obtain access to accounting requirements as published there free of charge. Free subscription to Accounting Standard Codification (ASC) does not provide certain search, copying and printing options. Those options are available with a paid subscription. At fasb.org accounting requirements are published by main financial statement areas: Assets, Liabilities, Equity, Revenue, Expenses, Broad Transactions, etc. Each area has a number of sections. For example, Assets breaks down to Cash and Cash Equivalents, Receivables, Investments, etc. Each section has a number of line-items within. For example, Investments have line-items Investments in Debt and Equity Securities, Equity Method Investments, etc.

The accounting requirements above are relevant to both private and public companies. Line-items relevant to public companies only are marked with letter “S”. Information in those line-items is published by Security and Exchange Commission (SEC). In principle, these line-items include all the information you need to find the reporting requirements relevant to SEC registrants. An alternative source for this information would sec.gov. Two main SEC regulations relevant to public companies are Regulation S-X and Regulation S-K.

Other than codified accounting standards, fasb.org offers so called Concept Statements. These statements describe basic elements and underlying concepts relevant to US GAAP. Examples include definition of the asset, revenue, general characteristics of financial information. CPAs rarely refer to the Concept Statements, however, those may be helpful while dealing with more fundamental accounting questions.

Lastly, all Big Four accounting firms publish their guidance on all major complex accounting topics. Examples include Lease Accounting, Revenue Recognition, Financial Instruments. All guidance is available publicly – you can google them.

Where to see most recent developments in US GAAP?

Fasb.org is a good source. Go to Standards, then Accounting Standards Updates Issued. You will see all accounting updates issued one by one and sorted out by year. Each heading provides brief description of the update. Each update is downloadable in PDF and provides a summary and background information.

Where to see future anticipated changes/updates to US GAAP?

Go to fasb.org, then Projects, then Technical Agenda. You will see all updates that FASB is working on including the stage of completion in the context of the overall process. For example, for a given update, Initial Exposure Draft is issued and the Comment Period is still open, meaning that folks can provide their comments on the proposed draft accounting update.

If you click on any of the updates in process, you’ll find more details and progress to date. Project objective and background will provide good high level understanding of the nature and the reason for the update in question.

For accounting updates at the later stages of the overall process, Technical Agenda provides Estimated Completion Date. Readers can use the date as an indication of when the final update will be published.