Accounting Standards Codification Affects Quarterly Reports

August 22nd, 2009

Now that the US Accounting Standards Codification is live and operational, investors in public companies that report under US generally accepted accounting principles (GAAP) can look forward to subtle but important improvements in financial reporting. The Codification could lead to more plain-English explanations and less technical jargon in the notes to the statements starting with quarterly reports for third quarter 2009. Public companies are weighing the merits of a move in that direction now.

The movement toward plain-English disclosures is especially important for US companies and investors. The US differs from other countries in that more half of our population is invested in the stock market, and there is considerable diversity among the users of financial statements. At one end of the spectrum are sophisticated financial analysts and big institutional investors who may be fully conversant with the underlying accounting standards. At the other end are individual investors, some of whom may have a tougher time sorting through the notes and references to related standards. The latter would benefit greatly from the types of plain-English explanations that enhance transparency and understanding.

To help users of financial statements understand the issues, the Center has published a summary of the changes brought by the Codification, the answers to frequently asked questions, and the issues being discussed today by companies and their boards of directors. The complete article is available at

Entry Filed under: Accounting

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