Since I was in college, CPAs have been calling for an alternative to the full GAAP accounting model that can be used for small companies. So many have longed for ‘small GAAP.’
It is time to celebrate because the day has finally arrived.
In fact, there are two alternatives.
One is from the Private Company Council. That will be a slightly slimmed down version of GAAP which excludes specific rules. The PCC is essentially a task force of the FASB which will specify what rules to exclude.
The other is called the Financial Reporting Framework for Small- and Medium-Sized Entities. Called FRF for SMEs, this separate body of knowledge is an OCBOA, completely apart from GAAP. This reporting framework has been developed by the AICPA.
Here are two great articles to give you an introduction:
- New option a game changer for private companies – The AICPA’s Framework for SMEs offers an alternative in non-GAAP reporting, by Robert Durak, CPA, CGMA writing in the Journal of Accountancy.
- New Reporting Options – Changes in Financial reporting Options for Private Companies, by John Lacey, Ph.D. writing in California CPA, a publication of the California Society of CPAs.
If you aren’t familiar with the cool changes taking place, check out the articles. If you’ve been wanting to see ‘small GAAP’, I think you’ll like this.
As time permits, I plan to have a lots more to say about FRF for SMEs and PCC.