Time for a "Little GAAP"

BY GREG MALKOWSKY

Thank you for the article “Shaking Up Financial Statement Presentation” (Nov. 08, page 56). As a practitioner who regularly serves small business owners, I can only assume that those individuals involved with the FASB and IASB (International Accounting Standards Board) financial statement project have never worked with small businesses.

The balance sheet is particularly cumbersome. Assets and liabilities are presented throughout the statement. This haphazard presentation does not serve the needs of small business. The title “Balance Sheet” is a misnomer since the statement does not disclose the total assets and liabilities. These totals would be found in the notes to the financial statements.

Currently, most cash flow statements are prepared using the indirect method. The mandated changes to the direct method ignore the users of the statements and their level of financial expertise. I can only imagine the skepticism from small business when advertising costs are shown as $43,000 on the statement of income and $38,000 on the statement of cash flow. I understand the reconciliation statement is the tool to explain the discrepancies. However, I believe that an additional statement to explain two other statements demonstrates the unnecessary complexity of this proposal.

In summary, I believe the project only complicates the statements and does not consider end users such as small businesses. What is the solution if this proposal becomes final? I believe the time has come for “Little GAAP.”

Greg Malkowsky, CPA
Oshkosh, Wis.

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