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Financial Accounting for Local and State School Systems: 2014 Edition
NCES 2015347
April 2015

Chapter 4: Governmental Accounting — Governmental GAAP Hierarchy

There are four categories in the governmental GAAP hierarchy. Listed in descending order of authority, they are as follows:

  • Category (a) consists of GASB Statements and Interpretations, which are periodically incorporated into the Codification of Governmental Accounting and Financial Reporting Standards, most recently published in 2012 (GASB 2012a).
  • CCategory (b) consists of GASB Technical Bulletins and AICPA Industry Audit and Accounting Guides and Statements of Position made applicable specifically to state and local governments by AICPA and approved by GASB.
  • Category (c) consists of AICPA Practice Bulletins made applicable to state and local governments by AICPA and approved by GASB. (This category includes the positions of groups of accountants organized by GASB to reach a consensus on accounting issues applicable to state and local governmental entities. However, GASB had not organized any such groups as of the release date of this handbook.)
  • Category (d) includes GASB Implementation Guides published by GASB staff as well as practices that are widely recognized and prevalent in state and local governments.

In the absence of a pronouncement covered by AICPA Rule 203 (AICPA n.d.) or another source of established accounting principles, other accounting literature, such as the following, may be considered, depending on its relevance to the circumstances:

  • GASB Concepts Statements;
  • Pronouncements referred to in categories (a) through (d) of the GAAP hierarchy for nongovernmental entities, if not specifically made applicable to state and local governments:

    • FASB Concepts Statements;
    • Federal Accounting Standards Advisory Board Statements, Interpretations, Technical Bulletins, and Concepts Statements;
    • AICPA Issues Papers;
    • International Public Sector Accounting Standards of the International Public Sector Accounting Standards Board or International Financial Reporting Standards of the International Accounting Standards Board;
    • pronouncements of other professional associations or regulatory agencies;
    • Technical Information Service Inquiries and Replies included in AICPA Technical Practice Aids; and
    • accounting textbooks, handbooks, and articles.

The appropriateness of other accounting literature depends on its relevance to particular circumstances, the specificity of the guidance, and the general recognition of the issuer or author as an authority. It should be noted that GASB Concepts Statements would normally be more influential than other sources in this category.

Currently, GASB is evaluating potential modifications to the GAAP hierarchy as set out in GASB Statement 55 to determine whether the number of categories currently used is necessary or whether some should be combined, resulting in fewer levels. GASB is also addressing the potential of elevating the GASB Implementation Guides to a higher level within the hierarchy, as well as evaluating the placement of AICPA pronouncements and GASB Technical Bulletins. A final statement is not anticipated until mid-2015; therefore, there will be no immediate impact on the entities that use this publication.

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