The American Institute of Certified Public Accountants (AICPA) has adopted a new financial reporting option for small and medium sized businesses that we introduced in the winter edition of our newsletter. The purpose of this new financial reporting option is to provide businesses and users of their financial information comprehensive and consistent financial statements as an alternative to GAAP financial statements.
This Financial Reporting Framework for Small- and Medium-Sized Entities (FRF for SMEs) is a great choice for owner-managers who need financial statements that reliably report what they own, what they owe and cash flows. The FRF for SMEs is simple yet grounded on solid principles; consistent yet flexible; and is not unnecessarily complex to provide financial statement users with the information they need.
Here are some highlights of the new financial reporting option:
- * It was designed to deliver financial statements that provide useful, relevant information in a consistent and simplified way.
- * While many small businesses today use cash or tax-basis as an alternative to GAAP (and can continue to do so), this may be a more appropriate option.
- * The framework has been subject to professional scrutiny and input from the public.
- * The framework is made up of traditional accounting principles blended with accrual income tax accounting methods, offering a reliable and consistent method.
- * This will be a stable framework, revised only as needed to incorporate significant developments in financial reporting.