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GAAP Hierarchy Simplified to Two Categories

Impacting all state and local government entities, a final statement that simplifies generally accepted accounting principles (GAAP) hierarchy has been issued by the Governmental Accounting Standards Board (“GASB”). Intended to improve financial reporting by having entities apply guidance in less variation, GASB Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments, condenses the hierarchy from the four authoritative GAAP categories under GASB Statement No. 55 to only two categories. One category includes GASB Statements of Governmental Accounting Standards, while the other category contains GASB Technical Bulletins and Implementation Guides, and American Institute of Certified Public Accountants guidance. The final statement is effective for reporting periods starting after June 15, 2015, and should be retroactively applied.

The news release on Statement No. 76 is available on the GASB website. Also follow up with our Government Services Group if you have further questions about the new GAAP hierarchy.