New Accounting Rules for Small Companies

Article excerpt

Millions of small businesses will be able to use simplified, streamlined methods for measuring and presenting their financial results under a new accounting framework expected to be announced Monday.

The new guidelines for "small and medium-sized entities" come from the American Institute of Certified Public Accountants, the nation's main accounting trade group.

The guidelines are designed as an alternative to generally accepted accounting principles, or GAAP, the system large companies use.

"It is a framework that is tailored for small business - a very relevant, simplified framework," said Bob Durak, the AICPA's director of private company financial reporting.

Public companies in the US must use GAAP, as must privately held companies if their lenders, bonding companies or regulators require it. But smaller, less-complex private companies long have complained that GAAP is overly burdensome and complicated.

The Private Company Council, a new panel created last year with the AICPA's participation, is focused on carving out potential modifications to GAAP to benefit privately held firms.

But even given those efforts, Mr. …