AICPA Enhances Tools to Assist CPAs with Implementation
Private company financial reporting has evolved more in the past year or so than during the previous four decades. In June the AICPA issued an accounting framework for smaller, owner-managed businesses that do not need financial statements based on U.S. generally accepted accounting principles, and the Financial Accounting Foundation’s Private Company Council has proposed alternatives within GAAP for private entities. Both the framework and the PCC have the same goal of improving financial reporting for private companies and both are critically important, as private companies represent the vast majority of the businesses comprising America’s non-governmental economy.
Many owner-managed companies are small or micro in size. They often are called Main Street businesses, mom-and-pop shops or suburbia’s business districts. The AICPA’s Financial Reporting Framework for Small- and Medium-Sized Entities was designed to serve this segment. The FRF for SMEs framework presents the small business community with an opportunity for robust and relevant financial statements that are simplified and cost efficient when U.S. GAAP is not required as a basis of accounting.