The American Institute of CPAs has released guidelines to help  privately held businesses determine which accounting framework, including the Financial Reporting Framework for Small- and Medium-Sized Entities, best meets their financial reporting needs. 

The National Association of State Boards of Accountancy provided input into the development of the new tool for CPAs and businesses after a dispute erupted between NASBA and the AICPA over FRF for SMEs (see NASBA and AICPA End Spat over FRF for SMEs). NASBA had advised accountants to wait until the Financial Accounting Standards Board and the Private Company Council had produced their own set of eased requirements under U.S. GAAP for private companies, but the two organizations agreed to settle their differences and work together on providing tools and illustrative examples to help accountants and their small business clients determine when it was appropriate to use a non-GAAP framework such as FRF for SMEs.

On Thursday, the AICPA released a decision tool in the form of a document setting out guidelines, a flow chart and tables for deciding on which framework to use. Prior to the issuance of the tool, the AICPA pointed out that it has released illustrative financial statements and disclosures, developed as an aid to implementing the FRF for SMEs framework and to help distinguish between financial statements based on the new framework and GAAP-prepared statements.

The AICPA has developed the FRF for SMEs framework for use by private, owner-managed businesses when GAAP financial statements are not required. The framework was designed to provide financial statement users with useful, relevant information in a simplified, consistent, cost-effective way. It is considered to non-GAAP special-purpose framework providing an Other Comprehensive Basis of Accounting, or OCBOA. Other OCBOA special-purpose frameworks include cash basis, modified cash basis, tax basis and regulatory basis. The decision tool is available at no cost at Decision Tool for Adopting an Accounting Framework.

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