Which item is the second level in the hierarchy applying to accounting rules?

• A. SAP Statement of Concepts
• B. SSAPs
• C. NAIC Annual Statement Instructions
• D. Consensus positions of the Emerging Accounting Issues Working Group

Answer: (B)

The arrangement of statutory accounting guidance follows a hierarchy from broader authority to more specific rules. The second level in this hierarchy is the formal accounting principles known as the Statements of Statutory Accounting Principles (SSAPs). These SSAPs translate the higher-level statutes and regulations into concrete rules for measurement, recognition, and presentation in statutory financial statements.

The top level consists of statutes and regulatory requirements that set the overarching mandates. The SSAPs then interpret and implement those mandates in practical, auditable terms. The other items sit lower in the stack: the Statement of Concepts is a foundational framework used to develop SSAPs, the NAIC Annual Statement Instructions provide specific reporting formats and forms to be used after applying SSAPs, and consensus positions of the Emerging Accounting Issues Working Group address new or evolving issues as guidance supplements, not the core second-level principles.

So, the second level in applying accounting rules is the SSAPs.