When preparing financial statements in accordance with Generally Accepted Accounting Principles (GAAP) there may be times when GAAP standards do not specifically address your situation, and other times, there might be conflicting standards. To make matters worse, the growing body of complex standards has resulted in standards overload. These facts make it difficult to determine which standard to follow. As an accountant, remember that the Statement of Accounting Standard Number (SAS) 69 establishes a hierarchy to follow. SAS 69 establishes five levels of GAAP; the highest level in the hierarchy that specifically addresses the issue establishes GAAP. The five levels of hierarchy for nongovernmental entities are:
Level A Financial Accounting Standards Board (FASB) Statements of Financial Standards
FASB Interpretations
APB Opinions
AICPA Accounting Research Bulletins (ARBs).....
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