GASB establishes new accounting hierarchy

The categories of authoritative GAAP are reduced from four to two.

New accounting guidance issued by GASB reduces from four to two the categories of authoritative GAAP in the GAAP hierarchy for state and local governments.

Under GASB Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments, the first category of GAAP consists of GASB statements of governmental accounting standards.

The second category of GAAP comprises GASB technical bulletins and implementation guides, as well as guidance from the AICPA that is cleared by GASB.

"Applying accounting standards can sometimes be complex, but identifying the right standards to apply should be straightforward," GASB Chairman David Vaudt said in a news release. "Statement 76 goes a long way toward making that a reality."

The new standard also addresses the use of authoritative and nonauthoritative literature for situations when GAAP does not specify the accounting treatment for a transaction or other event.

Statement No. 76 also elevates the authoritative status of implementation guidance to a level that requires it to be exposed for public comment before it is issued.

The requirements take effect for reporting periods beginning after June 15, 2015.


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