NASBA and AICPA Reconcile Differences on FRF for SMEs

The NASBA contended the AICPA created the FRF for SMEs as a special-purpose framework, or an other comprehensive basis of accounting, without appropriate due process, against an agreement made by the US Securities and Exchange Commission and the AICPA forty years ago to vest all standards-setting authority with the FASB, and without substantial support from stakeholders, including accounting regulators.
 
In the joint statement, the AICPA and the NASBA stated they have a shared belief that current US GAAP may not always meet the needs of small, private businesses and the users of their financial statements.
 
"The PCC, which was established as a result of the Blue-Ribbon Panel on Standard Setting for Private Companies created by NASBA, the AICPA, and the Financial Accounting Foundation (FAF), is currently developing an authoritative GAAP solution for private companies that we strongly support," the joint statement reads. "The PCC has made excellent progress to date, and both NASBA and the AICPA are committed to the PCC's eventual success in developing a GAAP-based financial reporting model for all private companies.
 
"As the PCC works to fulfill its mission to modify GAAP for private companies, the AICPA has developed the FRF for SMEs to provide private, owner-managed, Main Street businesses a non-GAAP accounting framework that is simple to apply and cost beneficial," the joint statement continues. "We believe that preparers and users of private company financial statements should responsibly assess the accounting approach to meet their current and future needs depending on individual company facts and circumstances."
 
In a recent Thomson Reuters survey of more than 200 accounting firms, 46 percent of CPAs say they are familiar with the FRF for SMEs. Additionally, 56 percent of respondents say they expect one or more of their clients to consider using the FRF for SMEs, 10 percent report they do not expect their clients to use the framework, and 34 percent were unsure.
 
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