The FASB has recently issued an exposure draft of a standard that would replace the current GAAP hierarchy (as dictated by SFAS  162).  The new hierarchy would simply consist of two levels:authoritative and non-authoritative guidance.

In effect, the FASB’s new Accounting Standards Codification would become the sole source of authoritative accounting and reporting standards in the U.S, with the exception of any rules and interpretive releases of the SEC.  All other nongrandfathered, non-SEC accounting literature not included in the Codification would become nonauthoritative.  That said, the migration from the current literature to the Codification was meant to be just that, a migration, and so was not intended to change GAAP, only to simplify the hierarchy.  The effective date of this proposed Statement would be July 1, 2009, and the comment period remains open until May 8, 2009.

This change seems to have gotten little airtime and so may catch some academics off-guard.  However, the Codification has been publicly accessible for the past year or so, and I’m sure many of you have had a chance to play with it.  If not, you can access the Codification here.

In my opinion, the Codification is dramatically easier to search and navigate than the current literature.  While the change means a little more work for me in the short-term (e.g., I now need to eliminate references to SFAS X or FSP Y in my class notes), I view the Codification as a big plus in the long-term.  In fact, since it has become publicly accessible, it has become my sole source for looking up the answers to GAAP questions.

My own experience has been quite positive, and I’d be interested in hearing whether others have had similar or different impressions in using the Codification.

It’s not immediately clear to me what sort of research opportunities this change might bring.  But, at a minimum, it will change the way we refer to GAAP when writing research papers.