Did the FASB Codification Reduce the Complexity of Applying U.S. GAAP?

55 Pages Posted: 10 Nov 2021

See all articles by Oliver Binz

Oliver Binz

INSEAD

Robert Hills

Pennsylvania State University

Matthew Kubic

University of Texas at Austin

Date Written: November 10, 2021

Abstract

We examine whether the Financial Accounting Standards Board (FASB) Codification reduced financial reporting complexity by making it easier for preparers to locate and apply relevant accounting guidance. We find that areas of U.S. GAAP with more dispersed and voluminous guidance before the Codification experience a larger post-Codification reduction in restatements. We find a similar decline in SEC comment letter questions referencing areas of U.S. GAAP with more difficult-to-locate pre-Codification guidance. Our results suggest that prior to the Codification, preparers had difficulty in locating and processing the appropriate accounting guidance and that the Codification mitigated this difficulty.

Keywords: Complexity, Codification, Restatements, Comment Letters

Suggested Citation

Binz, Oliver and Hills, Robert and Kubic, Matthew, Did the FASB Codification Reduce the Complexity of Applying U.S. GAAP? (November 10, 2021). Available at SSRN: https://ssrn.com/abstract=3960950 or http://dx.doi.org/10.2139/ssrn.3960950

Oliver Binz

INSEAD ( email )

Boulevard de Constance
CEDEP No. 11
F-7705 Fontainebleau Cedex, 77305
France

Robert Hills

Pennsylvania State University ( email )

University Park, PA 16802-3306
United States

HOME PAGE: http://https://directory.smeal.psu.edu/rwh5494

Matthew Kubic (Contact Author)

University of Texas at Austin ( email )

2317 Speedway
Austin, TX 78712
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
70
Abstract Views
235
rank
413,303
PlumX Metrics