Robert W. Stewart, the Financial Accounting Foundation vice president of communications, emphasized the differences between generally accepted cccounting principles and non-GAAP financial reporting in a statement made on Tuesday.
The Financial Accounting Standards Board and the American Institute of Certified Public Accountants are working on separate efforts to address the accounting concerns of private company stakeholders.
FASB is working with the new Private Company Council to find areas in GAAP where alternatives could reduce costs and complexity for private companies while maintaining the transparency, comparability and reliability of GAAP financial statements.
AICPA is creating a non-GAAP, special purpose framework for smaller businesses with lenders or investors that do not require the comprehensiveness of GAAP financial statements.
“A central responsibility of the FASB is to ensure that the public understands that there are significant differences between GAAP and non-GAAP financial reporting,” Stewart said. “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.”
Stewart said the AICPA acknowledged that businesses and accounting firms should be cautious while debating which financial reporting methodology would be the most appropriate.
The differences between GAAP and the non-GAAP framework should be clearly defined in financial statements and supporting materials in order to prevent non-GAAP financial statements from being confused with GAAP financial statements, Stewart said.