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GASB Proposes New GAAP Hierarchy For State And Local Governments

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The Governmental Accounting Standards Board (GASB) has issued a proposed statement, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments.
The Governmental Accounting Standards Board (GASB) has issued a proposed statement, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments.

This proposed statement would reduce the generally accepted accounting principles (GAAP) hierarchy to two categories of authoritative GAAP:
  • Statements issued by the Governmental Accounting Standards Board
  • GASB Technical Bulletins, Implementation Guides, and guidance issued by the AICPA that has been cleared by the GASB
The proposed GAAP hierarchy would also create an opportunity for public comment on GASB Implementation Guides and would require that future implementation guides be approved by the board.  Under the current model, GASB Implementation Guides are not subject to broad public exposure and are issued after feedback is provided by members of an advisory committee, provided that a majority of the board does not object to their issuance.

The proposed statement also provides guidance on the use of both authoritative and nonauthoritative literature in situations where transactions or events are not directly addressed by existing GAAP.  Specifically, the proposed statement encourages the use of GASB Concept Statements to resolve issues not addressed in authoritative pronouncements.

GASB Concept Statements would continue to be considered a nonauthoritative piece of literature under the proposed hierarchy.  Under the proposed Statement, GASB Interpretations would no longer be needed as their purpose can be met through other GASB pronouncements.

The proposed statement would be effective for periods beginning after June 15, 2015, and would be applied retroactively.  Early adoption would be permitted.  The proposed statement would also apply to all state and local governmental entities.

Comments in response to the proposed statement are due by December 31, 2014.

The full text of the proposed statement is available by clicking here.

 

Readers should not act upon information presented without individual professional consultation.

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