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CPAs Make Sure to Provide Financial Information that Makes a Difference

Financial_reportingIn these days of continuous information, it’s essential to give people and organizations precisely the details they need to make important decisions. What never fails to cut through the clutter is information that is relevant, understandable and useful (not to mention correct). As CPAs, we often are a conduit for complex technical information, providing analysis and guidance in the process. We currently are working on two critical initiatives that bring this hallmark of our profession to life.  

Financial Reporting

For decades, we wanted private companies and their financial statement users to have the information that suits their unique needs and is cost beneficial to them. The Financial Accounting Foundation and the Financial Accounting Standards Board now are working toward that goal with the soon-to-be-established Private Company Council, and we are committed to the new structure’s success. But that solution only helps private companies that need U.S. GAAP financial statements. The fact is, millions don’t. For them, the answer could be found in the AICPA’s new self-contained financial reporting framework for small- and medium-sized entities that is in development. This financial reporting framework, a blend of accrual income tax methods and traditional accounting methods, will be a less complex, less costly accounting option that is responsive to the needs and concerns expressed by the private company constituency. It will be applicable for any industry. Furthermore, it will be a formalized framework, not a concept whose implementation is learned through experience, resulting in uniform application. Before issuance, it will be subject to professional scrutiny (watch for an exposure draft this fall).

As part of the development process, we are exploring CPAs’ knowledge about non-GAAP accounting systems, what they would need to help them use the financial reporting framework that I described and what would help them educate the marketplace about its availability. We’re asking those of you who are involved in the private company environment (i.e., public accounting, preparers and users) to respond to an online survey so we can gather this information. The framework will be issued in the first half of 2013.

Government Fiscal Responsibility

Our new video program, What’s at Stake? A CPA’s Insights into the Federal Government’s Finances, is another effort to make sure useful information gets into the hands of the people who need it. One of my goals as chairman has been to develop an initiative that would better inform policy makers and the public about the financial implications of political and policy decisions.

The video, which also is available free on DVD, examines what we can learn about the nation’s fiscal health from the U.S. government’s financial statements. The video features a clear, non-partisan analysis designed to raise awareness of the difference between the various uses of the U.S. financial statements and the U.S. annual budget. It also discusses the challenges to our country’s financial sustainability. The goal is to open a more informed dialogue between policy makers and the public on our nation’s fiscal health. CPAs can use the video and related resources (a PowerPoint presentation, talking points and a backgrounder) to become involved in this effort to improve America’s understanding of the federal government’s true financial obligations. With your financial expertise, you are well positioned to take a leadership role in this area. We all should be eager to jumpstart the conversation.

Whether we’re talking about a company or our government, financial statements must provide useful decision-making information because, after all, there’s a lot of noise in the system. The CPA profession is initiating solutions to ensure that decision makers have access to the financial information they really need.

Gregory J. Anton, CPA, CGMA, Chairman of the Board of Directors, American Institute of CPAs.

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