Market Overview

AICPA Financial Reporting Framework for Small- and Medium-Sized Entities Exposure Draft Available for Comment


The American Institute of CPAs announced that an exposure draft on its proposed Financial Reporting Framework for Small-and Medium-Sized Entities (FRF for SMEs) is now available for comment. More than 20 million privately owned small- and medium-sized entities in the U.S. that are not currently required to prepare U.S. generally accepted accounting principles (GAAP) - based financial statements will soon have a new streamlined and cost effective financial reporting framework available to them. The FRF for SMEs is an other comprehensive basis of accounting (also known as a special purpose framework) which when finalized will offer small-and medium-sized enterprises a reliable, relevant and simplified financial reporting solution that addresses marketplace demands. Comments are due by Jan. 30, 2013.

“The AICPA has heard from privately held businesses, including the CPAs and bankers serving those companies, about their long overdue need for financial reporting relief,” stated Barry C. Melancon, CPA, CGMA, AICPA president and CEO . “Stakeholders involved with private small- and medium-sized business entities' financial reporting have made it known that they are looking for an alternative to the current financial reporting systems outside of GAAP. Responding to the needs of Main Street businesses, the Institute's new framework will be available during the first half of 2013.”

The Institute's FRF for SMEs will be a less complicated and less costly system of accounting for SMEs that do not need U.S. GAAP-based financial statements. The FRF for SMEs will be a cost-beneficial solution for owner-managers and others who need financial statements that are prepared in a consistent and reliable manner in accordance with a framework that has undergone public comment and professional scrutiny. The accounting principles comprising the FRF for SMEs are intended to be the most appropriate for the preparation of SME financial statements based on the needs of the financial statement users and cost-benefit considerations. Accounting principles in the FRF for SMEs will be responsive to the well-documented issues and concerns stakeholders currently encounter when preparing financial statements for SMEs.

“The AICPA has developed a financial reporting framework for small- and medium-sized entities that will fill the gap in guidance that many companies need to allow them to prepare meaningful financial statements on a basis where GAAP is not required,” commented David Morgan, chairman, AICPA FRF for SMEs Task Force, managing partner, Lattimore, Black, Morgan & Cain, Nashville, Tenn. “For many small companies, this will save time and costs while also producing financial statements that are more relevant to business owners and lending institutions. I believe this new framework will allow CPAs to deliver a product to their privately held business clients that is more in line with their needs.”

About the AICPA

The American Institute of Certified Public Accountants (AICPA) is the world's largest member association representing the accounting profession, with nearly 386,000 members in 128 countries and a 125-year heritage of serving the public interest. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting.

The AICPA sets ethical standards for the profession and U.S. auditing standards for audits of private companies, nonprofit organizations, federal, state and local governments. It develops and grades the Uniform CPA Examination and offers specialty credentials for CPAs who concentrate on personal financial planning; fraud and forensics; business valuation; and information technology. Through a joint venture with the Chartered Institute of Management Accountants (CIMA), it has established the Chartered Global Management Accountant (CGMA) designation to elevate management accounting globally.

The AICPA maintains offices in New York, Washington, DC, Durham, NC, and Ewing, NJ.

Media representatives are invited to visit the AICPA Press Center at

Mitchell Slepian, 212-5966177

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