Big Gaap/Little Gaap: Is Accounting for Small Business in the Balance?

Abstract

Big GAAP/Little GAAP (Generally Accepted Accounting Principles) discusses the rationale of applying uniform accounting and reporting practices to vastly diverse businesses. It incorporates a synopsis of previous discussions and a summary of findings and opinions of the American Institute of Certified Public Accountants (AICPA) committee appointed to study pertinent aspects of accounting for smaller businesses. The paper focuses on the CPA's role in the plight of the smaller and/or closely held businesses against supposedly unneeded but required disclosure and the authors ask, “Should disclosure requirements prescribed by GAAP be applied to all entities or should application be made on specific (and explicit) criteria?” This paper also critically evaluates the committee's report, discusses the need for differential reporting requirements for smaller and/or closely held businesses, and recognizes accomplishments to date in the area.