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.
Exposure Draft approved December 2013
Added to Current Agenda: April 2012
Added to Research Agenda: April 2011
- Project Plan
- Recent Minutes
- Tentative Board Decisions to Date
- Project staff:
GAAP Hierarchy—Project Plan
Accounting and Financial Reporting Issues:
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.
- Should some categories be combined to provide for fewer levels?
- 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)?
- Should the FASB Accounting Standards Codification be added to paragraph 6 as “other accounting literature?”
- 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
Topics to be considered
|January–March 2015:||Redeliberation of issues raised in response to the Exposure Drafts.|
|April 2015:||Redeliberation of issues raised based on respondent feedback.|
|June 2015:||Review ballot drafts and issue final Statement and Implementation Guide.|
GAAP Hierarchy—Recent Minutes
Minutes of Meeting, December 20, 2013
The Board reviewed a ballot draft of the Exposure Draft, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. After making minor clarifying changes, the Board members voted unanimously to issue the Exposure Draft.
The Board also reviewed a ballot draft of the Exposure Draft, Implementation Guide XX-1. Subject to minor clarifications agreed to at the meeting, the Board members unanimously agreed to not object to the issuance of the Exposure Draft.
Minutes of Meeting, December 10-12, 2013
The Board considered feedback from the GAAP Hierarchy Advisory Committee in response to the draft of the standards section of the Exposure Draft, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments, presented at the October 2013 Board meeting and also discussed the preballot draft of the Exposure Draft. Subject to clarifications and revisions agreed to at the meeting, the Board directed the project staff to prepare a ballot draft for consideration at the December 20, 2013 Board teleconference.
The Board also discussed the preballot draft of the Exposure Draft, Proposed Implementation Guide, and reviewed recommended modifications to selected Q&As. Subject to clarifications and revisions agreed to at the meeting, the Board directed the project staff to prepare a ballot draft for consideration at the December 20, 2013 Board teleconference.
The Exposure Draft, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments, was approved in December 2013.