![]() AU-C 210, Terms of Engagement, which require auditors to determine the acceptability of the financial reporting framework.GAAP includes volumes of authoritative guidance surrounding how transactions should be accounted for, implementation guidance, and interpretations, that is not the case for special purpose frameworks. While there are multiple frameworks which are considered special purpose frameworks, this report focuses only on the two which are most commonly used - the cash basis and the tax basis.ġ. What is the authoritative guidance for financial statements prepared under a special purpose framework? In this report, we provide responses to twelve common questions regarding special purpose frameworks. The CPEA frequently answers questions related to special purpose frameworks. This results in IFRS, as well as IFRS for small and medium-sized entities (IFRS for SMEs), being considered generally accepted accounting principles. This is due to the AICPA designating the International Accounting Standards Board (IASB) as the body to establish professional standards with respect to international financial accounting and reporting principles. Practice Note: International Financial Reporting Standards (IFRS) are not considered a special purpose framework. Other Basis: A basis of accounting that uses a definite set of logical, reasonable criteria that is applied to all material items appearing in financial statements Regulatory Basis: A basis of accounting that the entity uses to comply with the requirements or financial reporting provisions of a regulatory agency to which jurisdiction the entity is subjectĬontractual Basis: A basis of accounting that the entity uses to comply with an agreement between the entity and one or more third parties other than the auditor ![]() ![]() Tax Basis: A basis of accounting that the entity uses to file its tax return for the period covered by the financial statements These are other frameworks that also are referred to as other comprehensive bases of accounting (OCBOA), which include:Ĭash Basis: A basis of accounting that the entity uses to record cash receipts and disbursements and modifications of the cash basis having substantial support GAAP which are collectively referred to in the authoritative literature as special purpose frameworks. While true for many sets of financial statements, there are other widely-used alternatives to U.S. generally accepted accounting principles (U.S. When many consider financial statements, the default assumption is that they are prepared in accordance with U.S.
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