The American Institute of CPAs has released an exposure draft of its proposed Financial Reporting Framework for Small- and Medium-Sized Entities for comment.
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The "other comprehensive basis of accounting" or special purpose framework is aimed at the more than 20 million private U.S. businesses that are not currently required to follow GAAP, with the goal of offering them a "reliable, relevant and simplified financial reporting solution.
"The AICPA has heard from privately held businesses, including the CPAs and bankers serving those companies, about their long-overdue need for financial reporting relief," said institute president and CEO Barry Melancon, CPA, CGMA, AICPA president and CEO. "Stakeholders involved with private small- and medium-sized business entities' financial reporting have made it known that they are looking for an alternative to the current financial reporting systems outside of GAAP. Responding to the needs of Main Street businesses, the institute's new framework will be available during the first half of 2013."
"The AICPA has developed a financial reporting framework for small- and medium-sized entities that will fill the gap in guidance that many companies need to allow them to prepare meaningful financial statements on a basis where GAAP is not required," commented David Morgan, chairman of the AICPA FRF for SMEs Task Force and managing partner of Top 100 Firms Lattimore, Black, Morgan & Cain, Nashville, Tenn. "For many small companies, this will save time and costs while also producing financial statements that are more relevant to business owners and lending institutions. I believe this new framework will allow CPAs to deliver a product to their privately held business clients that is more in line with their needs."
Comments are due by Jan. 30, 2013.