Chair's corner.

AuthorAlmonte, Ernest A.

Chairman, AICPA Board of Directors

I wanted to talk about two important developments in accounting standards that are happening over the next month. The first one is that the three Financial Accounting Standards Board Staff Positions on fair value measurements and impairments become effective June 15. The new FSPs are in response to tremendous public controversy over the FASB's mark-to-market accounting rules as they related to unusually distressed markets. In our comments on the proposals, the AICPA expressed a lack of support for some of the provisions and support for certain others. The FASB, which is a separate organization from the AICPA, was responsive to the comments it received from the AICPA and the more than 600 comment letters, and made changes it saw appropriate. It's worth noting that the existing fair value rules still stand; these FSPs provide additional implementation guidance on valuing assets in illiquid markets, the likes of which could not have been anticipated when the mark-to-market accounting rules were first contemplated. In the end, the Institute full supports the FASB as an independent, private-sector accounting standard setter. This three-minute video featuring AICPA President and CEO Barry Melancon highlights what led to the issuance of the three FASB Staff Positions addressing fair value accounting.

Next up, on June 3 the FASB announced it voted to release the FASB Accounting Standards Codification[TM] as the authoritative source of nongovernmental accounting standards (besides Securities and Exchange Commission guidance). The codification will be effective for interim and annual periods ending after Sept. 15, 2009, which means preparers must begin using it for periods that begin on or about July 1, 2009. At that time, the GAAP hierarchy and structure, as you know it, will change significantly.

That's right. I hope by now you all are aware of and have explored the FASB Accounting Standards Codification. This comprehensive reorganization of the accounting literature into approximately 90 topics will make it easier to research, implement, comply with and stay current on accounting guidance. But you have to learn how to use it to get to that point.

While the codification is not intended to change GAAP, it does make groundbreaking changes in how GAAP is organized and the GAAP hierarchy. You could say, in other words, that the standards will both be completely the same and totally different. By that I mean that we...

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