GASB Seeks Comments on Hierarchy Codification and Audit Guidance Integration
September 24, 2008
The Governmental Accounting Standards Board (GASB) is seeking comments on two new Exposure Drafts (ED). One would transfer guidance currently contained in the American Institute of Certified Public Accountants’ (AICPA) auditing literature into GASB financial accounting and reporting standards. The second would incorporate the hierarchy of generally accepted accounting principles (GAAP) into GASB’s authoritative literature.
The proposal to transfer AICPA guidance directly into GASB literature addresses three areas not currently included in GASB guidance that establishes accounting principles:
- related party transactions
- subsequent events
- going concern considerations
The proposed statement would not establish new accounting standards but rather incorporates the existing guidance (to the extent appropriate in a governmental environment) into the GASB standards. The presentation of such principles in the accounting and financial reporting literature should directly benefit financial statement preparers.
The authoritative hierarchy ED would incorporate the GAAP hierarchy into the GASB authoritative literature. The hierarchy governs what constitutes GAAP for all state and local governmental entities, including public institutions. The proposal would establish within existing literature a hierarchy of authority that addresses sources of accounting principles such as (but not limited to):
- GASB Statements, Interpretations, and Technical Bulletins
- AICPA Industry Audit and Accounting Guides, Statements of Position, and Practice Bulletins cleared and made applicable by GASB
- Implementation Guides published by GASB staff
Pertinent other accounting literature such as but not limited to:
- GASB Concepts
- Certain FASB literature
- Certain Federal Accounting Standards Advisory Board literature
The objective of the proposal is to have readily available authoritative references. The ED seeks to improve the understanding of the principles needed for financial reporting.
NACUBO encourages public institutions to read and comment on the Exposure Drafts by the comment deadline of October 30, 2009. The proposals can be found on GASB’s website. Public institutions can also inform NACUBO’s comments by contacting Sue Menditto, director, accounting policy.
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