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12
www.ctcpas.org
considerations and consult with its
CPA to select a reporting framework
that is suitable to its needs.
Observations
We now have a new set of OCBOA
standards in the form of FRF for SMEs,
in addition to what previously existed.
Thenewframeworkwillbemodified
everythreetofiveyearsaccordingto
the AICPA, so practitioners may not
be inundated with changes as much
as we are with other pronouncements
that are authoritative in nature. How-
ever, these new standards are an ad-
dition to, not a substitute for, the tax
basis and cash/modified cash basis
of accounting that have existed for
many years.
The decision to use a framework other
than GAAP is not an easy one. There
are many things to consider and we
need to know our clients' intentions
well in order to advise them properly.
Using an alternate framework would
be a costly mistake if an entity later
changes the nature of its operations,
decides to go public, engages in sig-
nificantforeignoperations,etc.
For those clients where CPAs have
been associated with GAAP-basis fi-
nancial statements for many years,
sticking with GAAP may be the best ap-
proach. It may be the most cost-effec-
tive option simply because they have
been using it in prior years. OCBOA
statements may be appropriate for
those clients who have not previously
issued financial statements, provided
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(continued)
There is no quick fix to the "Little GAAP" discussion. The
vast majority of business entities in the U.S. are small
entities and there is so much diversity among them that
different reporting options should probably exist.