OCBOA financial statements: here's some practical guidance on a popular accounting option.
Journal of Accountancy › Vol. 196 Nbr. 4, October 2003
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Summary
Other comprehensive basis of accounting
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OCBOA financial statements: here's some practical guidance on a popular accounting option.
EXECUTIVE SUMMARY
* IN CERTAIN INSTANCES CPAs SHOULD CONSIDER preparing and reporting on financial statements using an "other comprehensive basis of accounting" (OCBOA). Tax-basis and cash-basis, including modified-cash-basis, financial statements are the most widely used OCBOA statements. * A MAJOR ADVANTAGE OF OCBOA STATEMENT is that many clients and external users understand them better than GAAP-basis statements. In addition, OCBOA statements may cost less to prepare compared with GAAP-basis ones: It's not uncommon to save clients up to 20% to 30% in time and cost. * ONE OF THE ISSUES CPAs FACE WITH OCBOA STATEMENTS is the adequacy of disclosures within them. A statement of cash flows is not required, but statement titles should clearly indicate the basis of accounting the practitioner used. The notes to the statements should include disclosures related to contingent liabilities, going concern considerations and risks and uncertainties. * SAS NO. 62 CONTAINS REPORTING GUIDANCE FOR WHEN a client engages a practitioner to audit OCBOA...See the full content of this document
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