March 5th, 2014 : Small Business Accounting Has A New Financial Reporting Option
Small Business Accounting Has A New Financial Reporting Option
When it comes to small businesses and reporting financial information, a new framework has been put into place that may make the process of reporting finances a bit easier. Often, small to medium sized privately owned businesses will use different methods when it comes to financial reporting, such as cash based accounting methods or income tax, however there are other accounting methods available. The Financial Reporting Network for Small and Medium Sized Entities is a financial reporting framework that was created by the American Institute of CPAs that creates an easier option for private company owners, stakeholders, or investors to find information in a much simpler way.
What Is The Financial Reporting Framework And How Does It Work?
The Financial Reporting Framework for Small and Medium Sized Entities, or FRF for SMEs, is an accounting option for either owners or managers of a small to medium sized business who would like financial statements that accurately keep track of what is owned, what is owed, and the exact cash flow that their company is experiencing. This consistent and flexible accounting option is simple rather than complex, but it still provides those who need this information with an equally accurate account as any other financial reporting method. It’s simplicity of use is what sets this method aside from other methods of accounting and financial reporting, making it ideal for smaller privately owned businesses.
Some benefits of FRF for SMEs are:
The financial information is relayed in a simple and concise way that is easy to read and easy to understand.
This method has received input from the public as well as professional improvements.
This method is created using both traditionally used methods of accounting as well as income tax accounting methods, providing a reliable option that can be applied to many different types of businesses or types of accounting.
FRF for SMEs provides a stable framework that can be applied consistently without revision unless major developments are made.
CPAs all around the country are working hard to raise awareness of this new accounting method, spreading the knowledge of the benefits of FRF for SMEs to banks, lenders, investors, and small businesses alike. Education about this new method is the most effective tool when it comes to its implementation, and once the benefits of FRF for SMEs are realized, businesses can begin to perform their financial reporting in a more efficient and simple to read way.
The CPAs who have created the FRF for SMEs method of financial reporting did so with the average small privately run business in mind, making it as simple as possible for the average business person to benefit from. This main street business mentality is what allows this method to be so user friendly and easy to implement, as it was made to be effective for any level of small to medium sized business. FRF for SMEs may be able to help companies become more independent with their financial decisions as well, as its simplicity in use and reading will allow business owners to make financial decisions on their own rather than needing to consult with their finance professionals.
FRF for SMEs may not be for every business, but it is an option that can benefit the way many businesses perform their financial reporting tasks. Contacting a CPA or other finance professional to see if this method of accounting and financial reporting is right for any specific type of business is never an unwise idea, as the benefits that FRF for SMEs provide to smaller businesses prove to be plenty.