Question

USING THESE TWO

Financial Accounting Standards Board (FASB 2008). Statement of Financial Accounting Standards No. 57 Related Party Disclosures.

Financial Accounting Standards Board (FASB 2020). Accounting Standards Codification 850 Related-Party Transaction.

ANSWER THE FOLLOWING QUESTION:

The current FASB Accounting Standards Codification (ASC) system/format dates back to 2009. Before that FASB Accounting Standards consists of Statements of Financial Accounting Standards (SFAS). For the most part there have not been major changes in the substance of GAAP, but the two systems are different in how they organize GAAP. What is the style/format difference between the pre-2009 SFAS and the post-2009 ASC?

Answer 1

To understand the difference, we must define what is FASB. FASB is a unconventional non profit organization which manages rules for establishing accounting and financial reporting standards for all companies and non profit organizations in the United States, which goes along with GAAP. It was started in 1973 to triumph Accouting principal Board and convey on its mission.

Differences:

a There was one change The change included into the Codificated of AICPA TIS 5100 in terms of Revenue Recognition, concerning software revenue recognition, all other TIS are to studied under non authoritative origin of GAAP. Those firms that have not previously accompany TIS 5100 will have to take on the advice on a forthcoming basis of revenue transactions set foot in or significantly modified in tax years on or after December 15 2009 and interlude periods within those years.

b. The FASB has put in some chosen items to the Codification, that did not earlier exist in the dependable standards, that will infact create GAAP in restricted situations.

c. It moved its focus from Audit basis to entity basis. It had two tiers one is Accouting principles and the other was Authoritative accouting literature. It will replace four levels of GAAP hierachy in SFAS no 162 with just two levels authoritative and non authoritative. Authoritative sources will be included in the codification, while non authoritative will not be included.

The important difference and similarities linking the two standards are as follows:

1. SEC rules, explanatory releases and Staff Accounting Bulletins continue to be allocated as category (A) GAAP for SEC registrants. Note that FASB EITF Abstracts (EITF D-Topics) are category (A) for SEC registered companies and category (C) for non registered companies.

2 . SFAS No. 162 adds FASB Statement No. 133, execution Issues and FASB Staff Positions in category (A) of Tier1. These items were not included in SAS No. 69 category (A).

3. Category (B) and category (C) are the matching for both SAS No. 69 and SFAS No.162.

4. AICPA business Audit and Accounting Guides and Statement of Position not cleared by the FASB are categorically  included in category (D) by SFAS No. 162; however, they are not addressed in SAS No. 69. Otherwise, category (D) is similar for both SAS No. 69 and SFAS No. 162.

5 The classifications A through D specify the respective significance of a standard with category (A) being the most authoritative, then category (B).

6. The succeeding table contrasts the provisions of SAS No. 69 with SFAS No. 162 to highlight the resemblance and contrasts between the two assertion

7. The ASC is not the formal source of SEC counsel and does not include the entire occupants of SEC rules, directives , interpretive releases and staff guidance. Also, the ASC does not include governmental accounting standards..

8. It is organized in a hierachical structure, whereas previous was not as per hierachical structure.

Note: I have given some differences. However, I request you to do your research on this for more information.

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