The Public Company Accounting Oversight Board has published a set of staff questions and answers intended to address how auditors should use the recently issued FASB Codification.
The document recognizes that the Codification now represents the single source of authoritative GAAP. I encourage auditors to familiarize themselves with the Codification, said PCAOB chief auditor Martin Baumann.
However, the staff Q&A also recognizes that many PCAOB documents still refer to the original U.S. GAAP standards, and the PCAOB advises auditors to look to the Codification for the definitive version. Auditors should disregard descriptions of and references to accounting requirements in PCAOB standards that are inconsistent with the Codification, said the PCAOB. Auditors should look to the relevant sections of the Codification and to SEC requirements to identify the applicable accounting and reporting requirements for the company under audit.
In some cases, the wording may have changed and that could subtly influence the interpretation of a standard, the PCAOB acknowledged.
The FASB has stated that, generally, the Codification does not represent a change in U.S. GAAP, said the PCAOB. The FASB, however, has acknowledged that through the process of drafting the Codification, certain wording changes might theoretically lead an issuer to conclude differently on an accounting matter. To address those types of changes, the FASB will continue to accept feedback on Codification content after the effective date to improve content and address unintentional changes, when applicable.
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