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.