NEW YORK (AP) — A new financial reporting system for small businesses was introduced Monday, giving owners an alternative to the complex rules with which big corporations must comply.
The American Institute of Certified Public Accountants said its Financial Reporting Framework for Small- and Medium-Sized Entities is a streamlined system for creating financial statements for privately held owner-managed businesses that are not required to use US Generally Accepted Accounting Principles, or GAAP. The new system is designed to help owners prepare financial statements that clearly and concisely report assets, debts and cash flow. The statement can be used in loan applications, according to the AICPA, a trade group for accountants.
GAAP is the financial reporting system that public companies are generally required to use. But it has requirements that don't apply to a small or medium-sized private company.
Other alternatives to GAAP exist for small businesses, but they do not necessarily include a statement of cash flow, one of the key factors that go into a lender's decision to grant a loan.
Information about the new system, including a detailed explanation of its requirements, can be found on the AICPA website. Visit http://tinyurl.com/lujbbme