Project Pages

GAAP Hierarchy

Project Description: This project considers possible modifications to the hierarchy ofgenerally accepted accounting principles (GAAP hierarchy), as set forth in Statement No. 55, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. It reexamines the hierarchy levels to assess whether the standards-setting process and the governmental financial reporting environment have sufficiently evolved since the establishment of the original hierarchy by the American Institute of Certified Public Accountants (AICPA) in 1992 to warrant reconsideration or reconfiguration of certain aspects of the structure.

Status:
Exposure Drafts approved: December 2013
Added to Current Agenda: April 2012
Added to Research Agenda: April 2011

GAAP Hierarchy—Project Plan


Background
: At the beginning of the project that resulted in Statement 55 and Statement No. 56, Codification of Accounting and Financial Reporting Guidance Contained in the AICPA Statements on Auditing Standards, the Board evaluated two approaches. One approach considered was to adopt the GAAP hierarchy essentially as it currently exists in the AICPA’s auditing literature. The other approach considered was to reexamine the hierarchy levels to assess whether they should be reconsidered or reconfigured based on changes to the standards-setting process and the governmental financial reporting environment since the hierarchy was set forth. The Board recognized that taking the first approach would not significantly affect practice but the latter approach, involving redeliberation, could have resulted in changes in practice. The Board concluded that the transition from the audit literature to the accounting and financial reporting standards should be as undisruptive as possible; therefore, the first approach was taken.

This project entails pursuing the latter course of action and could result in changes to the structure of the GAAP hierarchy.

Accounting and Financial Reporting Issues:
  1. Should some categories be combined to provide for fewer levels?
  2. Should Implementation Guides (Q&As) be elevated to a higher level (currently level D)? Should AICPA pronouncements be elevated to a higher level (currently in levels B and C)? Should GASB Technical Bulletins be elevated to a higher level (currently level B)?
  3. Should the FASB Accounting Standards Codification be added to paragraph 6 as “other accounting literature?”
Project History:
  • Pre-agenda research approved: April 2011
  • Added to current technical agenda: April 2012
  • Task force established? Yes
  • Deliberations began: August 2012
  • Exposure Drafts approved: December 2013
  • Comment period: February–December 2014

Current Developments: The comment period concluded for the Exposure Draft of a proposed Statement, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments, and the Exposure Draft of a proposed Implementation Guide, Implementation Guide No. 20xx-1. The public comment period ended December 31, 2014.

Work Plan:
 

Board meetings

Topics to be considered

January–March 2015: Redeliberation of issues based on respondent feedback.
April 2015: Review preballot drafts of final Statement and Implementation Guide.
June 2015: Review ballot drafts and issue final Statement and Implementation Guide.

GAAP Hierarchy—Recent Minutes


Minutes Archive

GAAP Hierarchy—Tentative Board Decisions to Date


The Exposure Drafts, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments and Implementation Guide No. 20XX-1 were approved in December 2013.