Last month, the AICPA released a new financial reporting framework (FRF) for small and medium-sized entities (SMEs) that are privately-held and not required to report under US GAAP. This FRF is not intended to be a replacement for US GAAP when US GAAP reporting is required.
The AICPA anticipates that this new framework may be used by closely-held, for-profit entities, external financial statement users with direct access to management or SMEs that are not required to report under US GAAP. Some examples that highlight the differences from US GAAP include simplification of lease accounting, derivatives, revenue, goodwill and consolidation of subsidiaries. This may be a cost-effective option for some SMEs who do not deal with complex transactions yet are burdened by cumbersome reporting requirements of US GAAP.
The Private Company Council, which operates under the Financial Accounting Standards Board, also has undertaken the task of modifying US GAAP for SMEs and currently is working with the AICPA to overcome any differences.
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