CPA firms are predicting they will face challenges in gaining acceptance of the American Institute of CPAs’ recently introduced Financial Reporting Framework for Small and Medium-sized Entities, according to a new survey.

The survey, by Thomson Reuters, found that 46 percent of the CPAs polled said they are familiar with the new FRF for SMEs. The framework, released by the AICPA last month, is another GAAP-alternative to meet the unique needs of these entities' and their financial statement users (see AICPA Releases Non-GAAP Reporting Framework).

“In our survey of more than 200 accounting firms, 40 percent of those familiar with the framework said the biggest challenge will be acceptance by lenders, 31 percent said it will be acceptance and understanding by the firm, and 29 percent said it will be acceptance by clients,” said Scott Spradling, vice president of audit and accounting at Thomson Reuters, in a statement.

In addition, 56 percent of the survey respondents said they expect one or more of their clients to consider using FRF for SMEs, 10 percent said they do not expect their clients to use the framework, and 34 percent were unsure.

“While there have been a number of critics, many CPAs who deal with complexity on a daily basis have expressed support for the framework and have applauded the AICPA’s efforts to provide a more comprehensive alternative to GAAP,” said Steve Eason, director of audit and accounting editorial at Thomson Reuters. “We’ve talked with a number of practitioners who intend to further evaluate using the framework.”

One CPA, Robin Barnett of Kittell Branagan & Sargent, told Thomson Reuters, “I expect the majority of clients and users of client financial statements are completely unaware of the framework, what it means, and if they can use it. It’s going to take some education. Assuming it's well received, it could be a great fit for some of our client base. There are millions of small businesses in the U.S., so I have to believe there is a demand for it, especially as the FASB continues to approve complex accounting standards that are costly for small businesses to implement and difficult to understand.”

The new framework has attracted some controversy, with the leaders of several other prominent accounting organizations and firms, including the National Association of State Boards of Accountancy, the Institute of Management Accountants, the Financial Accounting Foundation, and PricewaterhouseCoopers, expressing reservations (see NASBA Tells Private Companies: Don’t Use AICPA Financial Reporting Framework, NASBA and PwC Oppose AICPA Plan for SME Framework, AICPA Enlists Support of State CPA Societies in Spat with NASBA over FRF for SMEs, and FAF Ushers in New FASB and GASB Leaders with New Web Site, and Reignites Dispute with AICPA).

The survey results are included in a Thomson Reuters Checkpoint special report, “Financial Reporting Framework for Small- and Medium-Sized Entities,” which is available to download at no cost at The special report also includes a description of the framework, differences between GAAP and the AICPA’s framework, the typical characteristics of small- to medium-sized entities, and an explanation of required disclosures, interwoven with analysis and observations to help practitioners become familiar with the framework.

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