The American Institute of CPAs has released its much-anticipated Financial Reporting Framework for Small- and Medium-Sized Entities, which is aimed at providing an alternative reporting option for small businesses that aren’t required to use GAAP.
With the goal of making reporting simpler for small businesses, the FRF for SMEs takes what the institute describes as a “common-sense” approach based on traditional accounting methods, including using historical cost instead of complicated fair value measurements; reducing book-to-tax differences to eliminate a variety of adjustments; and allowing a degree of optionality so businesses can tailor the presentation of statements.
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