GASB proposes new GAAP hierarchy for state and local governments

BY KEN TYSIAC
February 28, 2014

A new GASB proposal is designed to help state and local governments clearly identify the appropriate guidance to apply to their financial reporting.

GASB on Thursday issued the proposal, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments, as an exposure draft.

The proposed statement would change the “GAAP hierarchy” for state and local governments. The GAAP hierarchy lists the order of priority for pronouncements a government should follow.

GASB is proposing reducing the GAAP hierarchy to two categories of authoritative GAAP. Currently, four categories of authoritative GAAP are described in GASB Statement No. 55, also titled The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments.

Under the proposal, the two categories of authoritative GAAP would consist of:

  • GASB statements of governmental accounting standards.
  • GASB technical bulletins and implementation guides, as well as guidance from the AICPA that is specifically cleared by GASB.


The proposal is intended to improve implementation guidance by elevating its authoritative status and requiring that all implementation guidance be exposed for public comment.

“Applying accounting standards can sometimes be complex, but identifying the right standards to apply should not be,” GASB Chairman David Vaudt said in a news release. “The GAAP hierarchy proposal will help stakeholders be more efficient by bringing all authoritative accounting and financial reporting literature together in one place.”

To accompany the proposed hierarchy, GASB issued a proposed implementation guide, which would be a culmination of all implementation guidance and would elevate the level of such implementation guidance in the GAAP hierarchy. The change in the level of authoritativeness of implementation guidance necessitated certain changes to the existing guidance. A list and description of changes can be found in Appendix C of the proposed implementation guide.

The proposed guidance would take effect for financial statements for periods beginning after June 15, 2015.

Comments are sought on the proposals by Dec. 31 and can be emailed to director@gasb.org. Comments on the hierarchy proposal should be addressed to the Director of Research and Technical Activities, Project No. 33-1ED, and comments on the implementation guide proposal should be addressed to the Director of Research and Technical Activities, Project No. 33-2ED.

Ken Tysiac ( ktysiac@aicpa.org ) is a JofA senior editor.

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