Federal GAAP Hierarchy

For questions about this project, email gaaphierarchy@fasab.gov.

Project Objective

SFFAS 34, The Hierarchy of Generally Accepted Accounting Principles for Federal Entities, Including the Application of Standards Issued by the Financial Accounting Standards Board, incorporated the hierarchy of GAAP into FASAB’s authoritative literature. SFFAS 34 generally carried forward the hierarchy as set forth in Statement of Auditing Standards 91, Federal GAAP Hierarchy. SFFAS 34 provides the sources of accounting principles and the framework for selecting the principles used in the preparation of general purpose financial reports of federal entities that conform with GAAP.

As part of FASAB’s overall reexamination of existing standards, the Board will consider ways to improve, simplify, clarify, and streamline the federal GAAP hierarchy to ensure it is effective.

FASAB GAAP Hierarchy Working Group

FASAB formed a working group to assist the Board with the reexamination of the federal GAAP hierarchy project. The FASAB GAAP Hierarchy Working Group webpage provides further information on the working group objectives and activities, to include past meeting agendas, minutes, and other information.

History of Board Deliberations

June 2025

Staff coordinated and established a FASAB GAAP hierarchy working group. The working group roster includes representatives from each of the sponsors, financial management chief financial officer community, audit community, and affiliated associations. The working group will hold a series of round table meetings to assist the Board as it considers ways to improve, simplify, clarify, and streamline the federal GAAP hierarchy to ensure it is effective. The first working group meeting was in June 2025. Considering it was the first meeting, the meeting primarily focused on background information and objectives of the project.

April 22, 2025

At the April Board meeting, the Board considered the project plan for the federal generally accepted accounting principles (GAAP) hierarchy project. FASAB added the project to the active project agenda as part of its reexamination of existing standards. SFFAS 34, The Hierarchy of Generally Accepted Accounting Principles, Including the Application of Standards Issued by the Financial Accounting Standards Board, was the third most requested reexamination topic. Stakeholders suggested the Board

• simplify the federal GAAP hierarchy so that it may be more practical,
• clarify “practices that are widely recognized and prevalent in the federal government” because it is vague and could allow for many interpretations, and
• clarify “other accounting literature” and how it fits into the GAAP hierarchy.

SFFAS 34 preserved the long-standing and common practices of all U.S. accounting standard-setting bodies at the time it was issued in 2009. Since then, the Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB) have revisited their respective four-level GAAP hierarchies and each reduced the number of levels. They both also addressed the use of “authoritative” and “nonauthoritative” literature in the event that the accounting treatment for a transaction or other event is not specified within a source of authoritative GAAP.

Questions regarding clarifications of the federal GAAP are not new because they were brought up during the due process for SFFAS 34. This project is intended to resolve the longstanding questions, such as reexamining “practices that are widely recognized and prevalent in the federal government” to determine the intent. There is diversity in the views of preparers and auditors about which practices are part of the existing hierarchy.

Staff plans to form a small working group or round table to assist with the project. The working group was recommended over a task force because this approach would provide the most effective forum to discuss issues, alternatives, and recommendations while also ensuring that the participants possess the required expertise in this area.

Any changes to the GAAP hierarchy would result in the need to consider the effects of the proposed change. For example, a potential significant change may result in the need to assess and consider the status of existing guidance.

The Board unanimously supported and approved the federal GAAP hierarchy project plan.

Briefing Materials – Topic B

March 2025

The Board added this project to the current technical agenda at the August 2024 meeting. Staff is preparing a project plan for Board consideration and approval. Staff is also performing research for this important project. Staff anticipates presenting the project plan at the April 2025 Board meeting.