Michael Brooder, Assurance Services Partner, Article "New Accounting Options Simplify Financial Statements For Tech Start-Ups" Featured in Hartford Business Journal
Hartford Business Journal
Entrepreneurs beginning new technology companies have many issues to deal with, including developing their products and bringing them to market, raising capital, and growing their companies.
While accounting and financial reporting matters often are not priorities, lack of proper attention to them can impede the activities of young tech businesses.
To succeed, a technology-based entrepreneur needs more than an innovative product.
Often, the ramifications of poorly prepared or inaccurate financial statements are uncovered at the worst times, like during due diligence by an investor, or when a potential new customer requests to see the company’s financial statements.
To make it in this industry, companies normally are required to have an audit, review, or compilation performed on their financial statements by an independent accountant.
Before now, small and mid-size privately owned technology companies were required to prepare their financial statements in accordance with the complexities and challenges of U.S. Generally Accepted Accounting Principles, or GAAP.
Companies now may have another option, provided they have agreement and acceptance from their stakeholders.
On June 10, The American Institute of CPAs (AICPA) introduced the Financial Reporting Framework for Small and Medium-Sized Entities (FRF for SMEs) to help the small business community with its financial reporting needs.
The accounting framework is a new option for preparing streamlined, relevant financial statements for privately held, owner-managed businesses that are not required to use U.S. GAAP.