Norwalk, CT, April 2, 2009—The Governmental Accounting Standards Board (GASB) today issued GASB Statement No. 55, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. The Statement incorporates the hierarchy of generally accepted accounting principles (GAAP) for state and local governments into the GASB’s authoritative literature. It is intended to make it easier for preparers of state and local government financial statements to identify and apply the “GAAP hierarchy,” which consists of sources of accounting principles used in the preparation of financial statements so that they are presented in conformity with GAAP and the framework for selecting those principles.
The Statement will improve financial reporting by contributing to the GASB’s efforts to codify all GAAP for state and local governments so that they derive from a single source.
Prior to the Statement, the GAAP hierarchy was set forth in the American Institute of Certified Public Accountants’ (AICPA) Statement on Auditing Standards (SAS) No. 69, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles, rather than in the authoritative literature of the GASB. Statement 55 moves relevant portions of that SAS to the GASB literature without substantive changes. Because the GASB chose not to reconsider the guidance provided in the SAS, the order of priority for accounting and financial reporting guidance will remain unchanged in practice.
“The Board concluded that the GAAP hierarchy should reside in the accounting literature established by the GASB,” said Robert Attmore, GASB chairman. “This Statement will accomplish that objective while making it easier for preparers of state and local government financial statements to locate and apply important guidance that they previously had to look to the auditing literature to find.”
Statement 55 is effective immediately. To obtain a copy of the Statement, call the GASB Order Department at (800) 748-0659 or log on to www.gasb.org for more information.
About the Governmental Accounting Standards Board
The GASB is the independent, not-for-profit organization formed in 1984 that establishes and improves financial accounting and reporting standards for state and local governments. Its seven members are drawn from the Board's diverse constituency, including preparers and auditors of government financial statements, users of those statements and members of the academic community. More information about the GASB can be found at its website, www.gasb.org.