At CPA-Scribo, Charles Hall, CPA, covers FRF for SME – The Lowdown.
In a Q&A format, he provides background on the new alternative to GAAP for small, owner-managed, closely held businesses.
Best part of the post is a listing of 16 key points of the new framework. Check out the post for some of the major ideas in FRF-SME.
Here are some highlights of the Q&A:
Is “FRF for SME” GAAP?
No. (It is not little GAAP. It is not GAAP at all – not intended to be.)
Here are some comments of what impact their will be on attestation work and your peer review:
Can financial statements created using FRF for SME be audited, reviewed or compiled?
Yes. Yes. Yes.
Same answer as if you were to ask if you could audit, review, or compile modified cash or regulatory basis financials.
How will the use of FRF for SME change the peer review process?
No change; FRF for SME is just another OCBOA – like tax-basis or modified-cash basis.
I’ve seen a number of tax basis and cash basis reports while performing peer reviews. You have to properly report on the financial statements considering the relevant rules by which the financial statements were prepared. You have to refer to the actual names of the client’s statements and have to report on any departures from the relevant framework.
That’s the standard whether your client’s financial statements are based on GAAP, tax basis, modified cash, or FRF for SMEs.
Check out the full post. You’ll find some good background.