Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

FAQs on FRF for SMEs

with 2 comments

At CPA-Scribo, Charles Hall, CPA, covers FRF for SME – The Lowdown.

In a Q&A format, he provides background on the new alternative to GAAP for small, owner-managed, closely held businesses.

Best part of the post is a listing of 16 key points of the new framework. Check out the post for some of the major ideas in FRF-SME.

Here are some highlights of the Q&A:

Is “FRF for SME” GAAP?

No. (It is not little GAAP. It is not GAAP at all – not intended to be.)

Here are some comments of what impact their will be on attestation work and your peer review:

Can financial statements created using FRF for SME be audited, reviewed or compiled?

Yes. Yes. Yes.

Same answer as if you were to ask if you could audit, review, or compile modified cash or regulatory basis financials.

How will the use of FRF for SME change the peer review process?

No change; FRF for SME is just another OCBOA – like tax-basis or modified-cash basis.

I’ve seen a number of tax basis and cash basis reports while performing peer reviews. You have to properly report on the financial statements considering the relevant rules by which the financial statements were prepared.  You have to refer to the actual names of the client’s statements and have to report on any departures from the relevant framework. 

That’s the standard whether your client’s financial statements are based on GAAP, tax basis, modified cash, or FRF for SMEs.

Check out the full post. You’ll find some good background.

Written by Jim Ulvog

August 19, 2013, 8:46 am at 8:46 am

Posted in Accounting

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2 Responses

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  1. Jim, It will be interesting to see how lenders respond to FRF for SMEs in the coming months. I see a variety of opinions about its use, but I still believe it is a nice option, just like tax-basis and cash-basis can be in certain situations.

    Charles B. Hall

    August 27, 2013, 19:07 pm at 7:07 pm

    • Charles,

      I think it will take a long time to find out if FRF-SMEs will be accepted by the market, probably years. I don’t know if it will ultimately be accepted or fade away. It is a great option in the right circumstances.

      Thanks for the comment and thanks for the post.

      Jim

      Jim Ulvog

      August 27, 2013, 19:36 pm at 7:36 pm


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