FASB 162 The Hierarchy of Generally Accepted Accounting Principles

By Linda Cavanaugh, CPA - In May, 2008, the FASB issued Statement 162 which moves the GAAP hierarchy out of the auditing standards and into the accounting guidelines. The FASB and SEC believe that the hierarchy should be addressed to the entity preparing the financial statements and not to the auditors.

Here is your new hierarchy:

Level A:

1. FASB standards and interpretations
2. FAS 133 DIG issues
3. FASB staff positions
4. AICPA Accounting Research Bulletins and Accounting Principles Board Opinions

Level B:

1. FASB technical bulletins
2. cleared AICPA industry audit and accounting guides and statements of position

Level C:

1. AICPA accounting standards
2. cleared Executive Committee Practice Bulletins
3. FASB EITF issues
4. Topics discussed in Appendix D of EITF Abstracts

Level D:

1. FASB implementation guides
2. not cleared AICPA industry audit and accounting guides and statements of position
3. industry practice

Interesting to note, is that the FASB codification project that is due to be adopted in April, 2009 will make this hierarchy obsolete. When the codification becomes GAAP, anything outside the codification will be considered non-GAAP.

This standard may have been a waste of paper to print and a waste of our time to read and interpret. They should have just waited until next April.

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Linda is a CPA living in Southwestern Ohio, working as a research accountant for an investor-owned publicly traded utility company. She specializes in implementing new FASB and SEC requirements and FAS 133 derivative issues. In her role at the utility she has encountered many issues and written many memos, so send in your implementation and derivative issues and Linda will help figure out an answer.

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