If you're a CPA, you've got a headache. In fact, you've probably got several headaches.
One of them for sure is probably caused by the myriad jumbles of generally accepted accounting principles that can be found in a variety of locations - from the Financial Accounting Standards Board, the Emerging Issues Task Force, the Securities and Exchange Commission, and the American Institute of CPAs and its Accounting Executive Committee.
That's a lot to keep track of.
The total number of pronouncements is in the thousands - so many in so many places that an accountant or auditor can never be sure that she has considered all relevant references.
After a FASB survey revealed that 95 percent of constituent respondents supported a codification, the board resolved to get to work.
And that work is already underway.
"This is the most ambitious project that FASB has ever taken on," said Larry Smith, FASB director of technical application and implementation activities. "In effect, it is taking everything that exists in GAAP and rewriting it in a new and organized fashion."
The project is so vast and complex that FASB can only estimate the timeline as stretching "three to five" years into the future. The board's staff is just now finishing a pilot section to better understand what the final product will look like.
As the project progresses, FASB will increasingly orient other projects around the codification. As the codification comes together, the board will need to resolve conflicts that appear, fill in gaps, and position new standards to fit into the codification. "Once we get the codification up and running, effectively everything that the board does will be an amendment to the codification," Smith explained.
It's a monumental project, but it will be worth the effort, says FASB. Corporate accountants and auditors will be able to access all authoritative literature in one place and will have immediate access to new guidance. They'll be less likely to overlook a relevant pronouncement. The structure of the pronouncements will be consistent because it's all in one place, simplifying research and reducing research time.
The final codified set of accounting principles and standards would be Web-based, allowing quick linking, cross-referencing, searching, duplication, propagation, correction and so on. The project technicians are still designing the features of the final product.
The project will begin with a mapping stage, in which the relevant text at disparate sources will be identified, assigned to a section of the codification, effectively migrated there, and reworked to fit in. At the same time, conflicts must be identified and passed on to FASB for accelerated resolution.
Once the disparate texts of a topic have been identified, the information will have to be integrated, synthesized and "authored" as codified content that is true to the intention of existing GAAP. Following this authoring stage, the content will have to be edited for clarity, organization and consistency.
Existing FASB staff are not able to take on this task alone. The board therefore is already calling for new in-house staff and remote consultants. They will be assigned topics that are expected to take three to six months to complete.
For the mapping stage, the board is looking for people with expertise in specific standards and topic areas. They will need at least eight years of experience in accounting, with an emphasis on technical research, consultation or writing. Individuals involved in the authoring stage will need over 12 years of experience. Editors will need relevant experience. Editing will begin as the first units of content are authored, possibly by the fourth quarter of 2005.
Finding highly qualified accountants with time on their hands during a general shortage of CPAs will not be easy. Smith said that as many as 40 or 50 people may be involved before the project is done. Training will be given at FASB headquarters in Norwalk.
FASB staff has been doing the groundwork for the project. The challenge now is to find and train the first group of individuals. "If we can attract people in here by April, then the first training might take place in May or so," Smith said.
As the project progresses, FASB will issue surveys to solicit constituent feedback on various aspects of the content and design of the codification. One survey, posted on FASB's Web site (www.fasb.org) is already seeking comments on general organization, topics and subtopics.
Smith said that it's too soon to know the topic or timing of the next survey, but the board is already looking for volunteers to assess project results and respond to surveys.
FASB is also calling for qualified professionals to participate in the program. Interested individuals can find more details and contact information on the FASB Web site.
