Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

More background on FRF-SMEs, the ‘small GAAP’

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The webinar on the AICPA’s version of “small GAAP” mentioned earlier is rolled into a JofA article: A Quest for Relevance.

Check out the article for a summary of the new rules that can be used for small business accounting that avoid much of the extra complexity of GAAP.

Previously mentioned the webinar in my post, The so-called ‘small GAAP’ from AICPA is gonna’ be great.  It’s actually called financial reporting framework for small- and medium sized entities and it’s not GAAP, but you get the point.

Some highlights from the article:

The proposed special-purpose framework is geared for simplicity. It emphasizes historical cost over fair value. It calls for reporting of costs when they are incurred and revenue when performance is achieved with reasonable assurance that collection will occur.

Who would FRF-SMEs help most?

SMEs run by owner-managers are expected to find the proposed framework especially useful, as the financial statements prepared under the framework will confirm their assessments of performance, describe what they owe and own, and help users understand cash flows. The proposed framework is intended for SMEs whose financial statement users have direct access to management, and is intended for companies that have no intention of going public.

A brief picture of what the new rules look like:

No concept of variable-interest entities is included in the proposed framework, and preparers have the option of presenting parent-only financial statements. In addition, the proposed framework will not include a concept of other comprehensive income, and it will not require complicated accounting for derivatives such as interest rate swaps. Derivatives will be handled largely through disclosure, eliminating complicated issues.

Check out the highlights of the roundtable. I think you will really like what you see.

Written by Jim Ulvog

December 10, 2012, 7:16 am at 7:16 am

Posted in Accounting

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