Preparing GAAP financial statements can be treacherous. GAAP has become so voluminous and complex that it is easy to overlook accounting, reporting and disclosure requirements, potentially affecting the accountants' liability. Nonpublic entities, however, are not necessarily required to apply GAAP and there are less complex financial reporting frameworks that may be much easier to apply without sacrificing the quality of financial reporting. Even when applying GAAP, the less complex business entity may find that numerous requirements, including disclosures, are not relevant to users of their financial statements, may not be material to users, and often overshadow the information that is most relevant. This course will present alternative accounting frameworks that may be more suitable for the simpler business entity, including the AICPA's Financial Reporting Framework for Small to Medium-Sized Entities (FRF for SMEs) and the modified cash basis of accounting. We will also discuss approaches to GAAP, including developing disclosure checklists unique to each set of financial statements, identifying when disclosures may be omitted or complex accounting approaches may be avoided, and how to document those decisions to minimize adverse effects. When the cost of financial reporting to the small business enterprise exceeds the benefits, entities will lose the motivation to issue financial statements that are in conformity with GAAP and both the business entities and the related capital markets suffer. This course provides alternatives that help alleviate that dilemma.
Learning Objectives
- Identify alternatives to GAAP that may simplify accounting and reporting without sacrificing quality
- Develop disclosure checklists that are unique to each set of financial statements improving efficiency
- Learn how to save time in selecting and writing disclosures, while improving the effectiveness
- Understand how to document accounting and disclosure decisions to satisfy peer reviewers and users of financial statements
Major Topics
- Accounting for simple business entities
- FRF for SMEs and other alternatives to GAAP
- Avoiding the pitfalls and costs of GAAP reporting and disclosure requirements
- Documenting accounting decisions to minimize potential liability
