Financial statements play an integral role in business as well as a multitude of legal matters, including, but not limited to, bankruptcy, mergers and acquisitions, shareholder disputes, fraud and class action activities. As a result of the widespread use of financial statements, lawyers should be aware of a major change in structure and hierarchy of accounting standards occurring this month. These changes will affect auditors, preparers of financial statements and educators as well as lawyers counseling clients in many areas including regulatory, transactional and litigation matters.
Background
On July 1, the Financial Accounting Standards Board, or FASB, launched its new Accounting Standards Codification, or ASC, as the sole authoritative source for U.S. Generally Accepted Accounting Principles, or GAAP. The ASC does not change the GAAP, but rather alters its organization and presentation by providing all information in a single, topically organized structure and enables preparers, users and others who rely on or have an interest in the GAAP to quickly and efficiently identify relevant accounting standards.
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