In June 2009, the Financial Accounting Standards Board (FASB) issued the last FASB statement referenced in that form: FASB Statement No. 168, The FASB Accounting Standards Codification[TM] and the Hierarchy of Generally Accepted Accounting Principles--a replacement of FASB Statement No. 162. This standard establishes FASB Accounting Standards Codification[TM] (ASC) as the source of authoritative U.S. accounting and reporting standards for nongovernmental companies, in addition to guidance issued by the Securities and Exchange Commission (SEC), and is effective for financial statements issued for interim and annual periods ending after September 15, 2009. In FASB's Notice to Constituents, they suggest the use, going forward, of plain English references in financial statements and related footnote disclosures.
FASB provides the following example of plain English references in their Notice to Constituents when referring to the requirements of FASB ASC 815, Derivatives and Hedging: "as required by the Derivatives and Hedging Topic of the FASB Accounting Standards Codification."
In spring 2010, the AICPA reviewed the 2009 Forms 10-K of 50 SEC filers to see what types of references are being used in practice. All financial statements reviewed had a year-end between December 1, 2009, and January 31, 2010, when the FASB codification was fully effective for all of the companies. The companies selected included large accelerated filers, accelerated filers, nonaccelerated filers, and smaller reporting companies.
The sampling shows that although both FASB and the SEC have stated that the use of plain English is most appropriate when dealing with financial statements and notes to financial statements, nor everyone is there yet. It will be interesting to see if the plain English references trend continues upward once companies have had...