FAF STATEMENT ON AICPA´S NON-GAAP REPORTING FRAMEWORKNorwalk,
CT, June 10, 2013—The Financial Accounting Foundation (FAF) today
issued the following statement regarding the Financial Reporting Framework for
Small and Mid-Sized Enterprises released today by the American Institute of
Certified Public Accountants (AICPA). The statement should be attributed to
Robert W. Stewart, FAF vice president of communications.
has an interest in private company financial reporting – lenders, investors, and
private company executives – needs to understand the significant and substantive
differences between the two separate efforts now underway – one by the FASB, the
other by the AICPA – to address the accounting concerns of private company
"The FASB, working with the new Private Company Council, is
seeking to identify areas in U.S. Generally Accepted Accounting Principles where
appropriate alternatives could reduce costs and complexity for private companies
without sacrificing the transparency, comparability and reliability of GAAP
"The AICPA, with its Financial Reporting Framework,
is creating a non-GAAP, special purpose framework (otherwise known as an Other
Comprehensive Basis of Accounting, or OCBOA) for smaller, owner-managed, ‘Main
Street´ businesses, whose lenders or investors do not require the
comprehensiveness of GAAP financial statements.
responsibility of the FASB is to ensure that the public understands that there
are significant differences between GAAP and non-GAAP financial reporting. We
appreciate that the AICPA has made it clear in its press release and marketing
materials that its new framework is not – and is not intended to be – GAAP. The
AICPA also has made it clear that businesses and accounting firms should
carefully consider which financial reporting methodology – GAAP or non-GAAP – is
most appropriate, given the business' unique circumstances.
articulating the specific differences between GAAP and the AICPA framework in
financial statements and supporting materials will help ensure that financial
statements that are non-GAAP are not mistaken for GAAP and that companies that
may in the future require GAAP financial statements understand the implications
of using a non-GAAP reporting model.
"We also note that the FASB today
voted to endorse and expose for public comment three proposals from the Private
Company Council to simplify private company accounting within GAAP. One proposal
involves accounting for intangible assets acquired in a business combination.
The second involves accounting for goodwill. The third involves accounting for
certain types of interest rate swaps.
"The FASB and the PCC have
undertaken this work using a deliberative due process built on independence and
objectivity that seeks public input from a full spectrum of interested parties.
We believe that this is an excellent first step in the effort to make GAAP more
responsive to the concerns of private company stakeholders and highlights the
important work underway at the PCC."