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

The authors examine whether the Financial Accounting Standards Board (FASB) Codification made it easier for preparers and auditors to locate relevant accounting guidance. The authors find that areas of U.S. GAAP with more dispersed and voluminous guidance before the Codification experience a larger post-Codification reduction in restatements. The authors find a similar decline in SEC comment letter questions referencing areas of U.S. GAAP with more dispersed and voluminous pre-Codification guidance. The authors' results suggest that before the Codification, preparers and auditors had difficulty in locating the appropriate accounting guidance and that the Codification mitigated this difficulty.