Financial Financial Accounting Accounting

Research ToolsResearch Tools

Chapter 4

Learning ObjectivesLearning Objectives

Database research strategiesDatabase research strategies Challenges of accounting researchChallenges of accounting research Content of the FASB’s Codification Content of the FASB’s Codification

Research SystemResearch System The research process using the The research process using the

CodificationCodification SEC accounting for public companiesSEC accounting for public companies Cases to practice accounting researchCases to practice accounting research

Using a databaseUsing a database

Define information neededDefine information needed Determine sources to searchDetermine sources to search Use appropriate search methodsUse appropriate search methods View results and manage the View results and manage the

information (full text or citation)information (full text or citation) Communicate the research resultsCommunicate the research results

CodificationCodification

Comprehensive, but not complete, research Comprehensive, but not complete, research on accounting issues for the private sectoron accounting issues for the private sector

Ninety topical areas of prior level A-D GAAPNinety topical areas of prior level A-D GAAP Master glossaryMaster glossary Limited SEC content for user ease Limited SEC content for user ease

(Regulation S-X, Financial Reporting (Regulation S-X, Financial Reporting Releases, Accounting Series Releases, Releases, Accounting Series Releases, Interpretive Releases, Staff Accounting Interpretive Releases, Staff Accounting Bulletins, EITF Topic D, and SEC Staff Bulletins, EITF Topic D, and SEC Staff Observer Comments)Observer Comments)

Codification (contd.)Codification (contd.)

Codification supersedes all pre-Codification supersedes all pre-existing non-governmental existing non-governmental accounting and reporting standards.accounting and reporting standards.

Four main topical areas:Four main topical areas: Presentation (codes 205-299)Presentation (codes 205-299) Financial statement accounts (codes 305- Financial statement accounts (codes 305-

705)705) AssetsAssets LiabilitiesLiabilities EquityEquity RevenueRevenue ExpensesExpenses

Codification (contd.)Codification (contd.)

Four main topical areas: (contd.)Four main topical areas: (contd.)Broad transactions (805 – 835)Broad transactions (805 – 835) Industries (905 – 999)Industries (905 – 999)

The topical areas are further The topical areas are further refined into subtopics, sections refined into subtopics, sections and subsections (see figure 4-2)and subsections (see figure 4-2)

The Codification The Codification Research ProcessResearch Process

Methods of searchingMethods of searching Topical category searchTopical category search Master glossary searchMaster glossary search Search inquiriesSearch inquiries

When should the researcher stop When should the researcher stop searching?searching? Consider primary vs. secondary sourcesConsider primary vs. secondary sources Consider authoritative vs. non-Consider authoritative vs. non-

authoritative sourcesauthoritative sources

SECSEC

SEC accounting is not the same as SEC accounting is not the same as GAAP accountingGAAP accounting

SEC follows legal hierarchy to be SEC follows legal hierarchy to be discussed in a later chapterdiscussed in a later chapter

SEC has statutory authority to establish SEC has statutory authority to establish accounting rules and regulations for accounting rules and regulations for public companies (companies must file public companies (companies must file 10K’s, 8-K’s, 10Q’s)10K’s, 8-K’s, 10Q’s)

Regulation S-X – Form and Content of Regulation S-X – Form and Content of Financial StatementsFinancial Statements

Regulation S-K – Integrated Disclosure Regulation S-K – Integrated Disclosure RulesRules

SEC (contd.)SEC (contd.)

Financial Reporting Releases (FRRs) – Financial Reporting Releases (FRRs) – accounting principles that update Reg accounting principles that update Reg S-X and Reg S-KS-X and Reg S-K

Accounting and Enforcement Releases Accounting and Enforcement Releases (AAER’s) –(AAER’s) –

Accounting Series Releases (ASRs) – Accounting Series Releases (ASRs) – predecessor to FFRspredecessor to FFRs

SEC Staff Policy – not formally SEC Staff Policy – not formally approved but published in approved but published in interpretations. SAB’s similar to FASB interpretations. SAB’s similar to FASB technical bulletinstechnical bulletins

See Figure 5-10 for SEC hierarchySee Figure 5-10 for SEC hierarchy

SEC (contd.)SEC (contd.)

Accessing SEC filings and Accessing SEC filings and regulationsregulations Website (sec.gov)Website (sec.gov) Company websitesCompany websites SEC’s next generation EDGARSEC’s next generation EDGAR systemsystem Commercial databasesCommercial databases