A Guide to Using the Accounting Standards Codification

Michael C. Toerner, PhD, CPA

The GAAP hierarchy was created by Statement on Auditing Standards (SAS) 69, The Meaning of “Present Fairly in Conformity with Generally Accepted Accounting Principles,” in the Independent Auditor's Report, which became effective in March 1992. The idea behind SAS 69 was simple: The pronouncements of the various standards-setting bodies were placed into categories of unequal weight (or influence) so that accountants faced with questions would know where to begin their search for answers. Category A contained the most influential documents, followed by Categories B, C, and D; the “other accounting literature” category completed the hierarchy.