Kim Lamplough, Assurance Services Partner, Quoted in CFO.com Article "SMEs Warm to GAAP Alternatives"
By Kathleen Hoffelder
With GAAP still too complex and onerous for many small, private companies, some other financial-reporting alternatives are starting to look more appealing.
GAAP theoretically should work for small, private companies, but in reality it often doesn’t, says Kim Lamplough, partner in the assurance division at accounting advisory firm Marcum LLP. SMEs, for example, often invest in the buildings where they’re housed, which can create GAAP reporting problems, she says.
“All of a sudden, the small business owner finds himself involved in variable-interest-entity accounting conversations, where he has to explain to the [building’s] banker that in order to comply with loan covenants he has to provide GAAP statements,” says Lamplough. “They now have to consolidate the operations of the entity that owns the building into the [company’s] financial statements.”
The formal approach to SME financial reporting should also give companies an extra layer of credibility with their lenders, since the standards will be much more uniform, according to Lamplough.