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July 26, 2014
 
 
Canadian Excellence

Robert Mathieu




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Robert Mathieu

GAAP for the little guy (ABSTRACT)


Feltham, G., & Mathieu, R.

published: 2000 | Research publication | Refereed Journals - Accounting

Feltham, G., & Mathieu, R. (2000). "GAAP for the little guy". CGA Magazine, 34 (8), 48.



ABSTRACT:  Three conceptually different accounting models have been considered: a single set of GAAP without exclusions, essentially the status quo; a single set of GAAP with exclusions for small and medium-sized businesses; and 2 distinct sets of GAAP. A recent CICA task force report on SMEs essentially recommended the 2nd alternative. The primary rationale for the exclusions was to reduce SMEs' compliance burden. A model incorporating 2 sets of GAAP is more consistent with accounting theory than are the first 2 models. The application of a cost/benefit constraint may be inappropriate where it is inconsistent with accounting theory. If cost, rather than usefulness of information, dictates the standard-setting process for SMEs, there will be inconsistencies over time. Consideration of the adoption of big GAAP and little GAAP is recommended. The 2 set model is consistent with accounting theory, better allows for congruence with national policies for SMEs, and ensures that standards reflect important differences and needs.

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revised Jan 24/05

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