On June 10, the American Institute of CPAs introduced a new financial reporting framework [PDF] for small and medium-sized businesses.

The new financial reporting framework, or FRF,  gives companies another accounting option for “preparing streamlined, relevant financial statements for privately held owner-managed businesses that are not required to use U.S. Generally Accepted Accounting Principles (GAAP),” AICPA said in its press release announcing the move.

“The FRF for SMEs has been developed to provide consistent and simpler financial statements for small and medium sized entities where GAAP is not required,” Barry C. Melancon, president and CEO of  AICPA, said in the association’s release. “Some private businesses, typically smaller or those with less complex business models, will see the AICPA’s framework as an effective alternative to other existing financial reporting options.”

Also on June 10, the Financial Accounting Standards Board (FASB) endorsed three alternatives within GAAP proposed by the Private Company Council (PCC) that its statement said involve “accounting for intangible assets acquired in business combinations, goodwill, and certain types of interest rate swaps.”

“Today’s decision by the FASB to endorse three PCC proposals represents significant progress in our joint efforts to address concerns about the complexity and relevance of certain standards for private companies that prepare GAAP-based financial statements,”  FASB Chairman Leslie F. Seidman said in the board’s  news release. “We anticipate issuing the proposals for public comment later this month, and encourage our stakeholders to review them and let us know whether they believe they will improve financial reporting for private companies.”

The Financial Accounting Foundation (FAF) supported the FASB and PCC efforts, calling them “an excellent first step in the effort to make GAAP more responsive to the concerns of private company stakeholders.”

The foundation also cautioned businesses on the differences between the new AICPA framework and the plans being developed by FASB and PCC.

“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,” said Robert W. Stewart, FAF vice president of communications, said in a statement. “The AICPA also has made it clear that businesses and accounting firms should carefully consider which financial reporting methodology—GAAP or non-GAAP—is most appropriate, given the business’ unique circumstances.”

(iStockphoto/Thinkstock)