The Tennessee State Board of Accountancy has adopted a resolution officially recognizing the American Institute of CPAs’ recently issued Financial Reporting Framework for Small and Medium-sized Entities, apparently the first state board to do so.
The recognition of FRF for SMEs by the Tennessee Board of Accountancy comes only a week after the National Association of State Boards of Accountancy settled a dispute with the AICPA over FRF for SMEs, which NASBA had initially criticized (see
NASBA warned, however, that as non-authoritative guidance, FRF for SMEs would be difficult to regulate or enforce, and that the scope of “small and medium-sized entities” was undefined so a private company of any size or financial backing could potentially use FRF for SMEs (see
The AICPA responded by sending a letter to the leaders of state CPA societies asking for their support (see
The board of directors of the Tennessee Society of CPAs adopted a position in support of the new framework on July 2 and that in turn led to recognition by the Tennessee Board of Accountancy. The TSCPA is the state professional organization of CPAs with more than 9,000 members in all areas of public practice, government, education, business and industry. The TSCPA’s headquarters is in Brentwood, Tenn.
“We are excited to hear that the Tennessee State Board of Accountancy has formally recognized the new framework,” said TSCPA chair Kevin Hickman in a statement. “TSCPA believes that the new framework provides a reliable and simplified reporting alternative for small businesses that do not require GAAP financial statements, and we anticipate that this will allow businesses to reallocate internal resources toward services such as improved internal controls or enhanced assurance services.”
NASBA is also based in Tennessee, in the country music capital of Nashville. In a conciliatory editorial in NASBA's most recent newsletter, entitled, "Let's All Take a Breath," NASBA president and CEO Ken Bishop wrote, "On occasion, I hear from stakeholders about the disagreements NASBA may have with the AICPA. I acknowledge and appreciate that concern. While I would again argue that the disagreements may be natural and healthy, the comments clearly imply the expectation that we address these issues respectfully. I wholeheartedly concur with that premise."
Bishop noted that NASBA and the AICPA staff and volunteer leadership have a great working relationship, and oftentimes trade personal tips on selecting wines, vacation spots and college teams. "I believe that the conversations, debates and even arguments about the changes that are occurring in the accounting world are important to getting to a good end," he added. "We should never forget the myriad of challenges that we have faced together. It's too early to forecast the outcome of the FRF for SMEs debate, but we can turn down the volume a bit. In other words, 'Let's all take a breath!'"