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FASB Proposing Codification Changes

Accounting rules in the U.S. and abroad are converging.

The Financial Accounting Standards Board recently issued a proposal to make "certain technical corrections" to its codification. It is seeking public comment on the proposal from now until December 13, 2011.

The Accounting Standards Codification applies to all nongovernmental entities. Many of the changes affect terminology, and FASB said the provisions "are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities."

Accountants do not need to anticipate any changes to the Generally Accepted Accounting Principles. Since the GAAP aren't being affected, there will be no new differences between the U.S. system and the International Financial Reporting Standards, good news as the two boards continue convergence discussions.

On that front, switching the U.S. accounting system to IFRS remains a hot topic among corporations and CPAs, some of whom would be forced to learn a new reporting code if they have previously prepared financial reports only for U.S. companies.

According to Cathy Shakespeare, a professor at the University of Michigan's Ross School of Business, it's more likely that the U.S. government will elect to use a hybrid system of letting companies report in either GAAP or IFRS, in order to let FASB retain its oversight power.
 

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