AICPA - Financial reporting framework for SMEs 

June 14: The AICPA released its financial reporting framework for small- and medium-sized entities.

The financial reporting framework for SMEs is another comprehensive basis of accounting (OCBOA) special-purpose framework for private entities that do not need and are not required to issue GAAP financial statements.


The financial reporting framework for SMEs does not define what are small- and medium-size entities; however, it provides a list of characteristics that might prompt an entity to consider the use of this framework, such as:


  • The entity does not have regulatory-reporting requirements to prepare information on a GAAP basis.
  • There is no intention of a majority of the owners and management to take the entity public.
  • The entity is owner-managed.
  • The entity does not operate in an industry in which it is involved in transactions that require highly specialized accounting guidance, such as financial institutions and insurance entities.
  • The entity does not engage in overly complicated transactions.
  • The entity does not have significant foreign operations.
  • Key users of the entity’s financial statements have direct access to management.

There is no effective date because use of the framework is optional.


Read a June 2013 report [PDF 99 KB] prepared by KPMG LLP: Defining Issues: Revenue Recognition: AICPA Releases Financial Reporting Framework for Small- and Medium-Sized Entities




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