Hierarchy of GAAP

The hierarchy of GAAP describes the authority level of different accounting proclamations. It is a 4-level framework that categorises FASB (Financial Accounting Standards Board) and AICPA (American Institute of Certified Public Accountants) declarations on accounting practice.

An individual should first search for the appropriate advice at the top of the GAAP hierarchy while researching an accounting issue. In case appropriate information is found at the top of the hierarchy, the researcher should look further down across the different levels of the hierarchy until the pertinent announcement is found.

Top level pronouncements normally deal with broad issues while the lower level addresses the technical issues.