A11 Special Purpose Framework

Question 1

Special Purpose Framework

Answer 1

SPF is a basis of financial accounting other than GAAP. Mgmt of nonissuers can do this. SPF includes cash basis, tax basis, regulatory basis, contractual basis, & other comprehensive basis of accounting (OCBOA).

Question 2

Comprehensive Basis of Accounting

Answer 2

FS that are prepared in accordance with a comprehensive basis of accounting other than GAAP that are not suitably titled require a qualified opinion with a basis for modification paragraph.

Question 3

Purpose of Framework

Answer 3

A description of the purpose for which financial statements are prepared included within the mgmt’s responsibility paragraph is required for FS prepared using regulatory or contractual basis, but NOT cash basis.

Question 4

Cash Basis

Answer 4

Cash basis is used to record cash receipts & disbursements along with certain modifications of this basis. (Eg depreciation).

Question 5

Tax Basis

Answer 5

Tax basis is used to file its income tax return.

Question 6

Regulatory Basis

Answer 6

Regulatory Basis is used to comply with regulatory agency requirements.

Question 7

Contractual Basis

Answer 7

Contractual Basis is used to comply with an agreement between the entity & third parties.

Question 8

Other Basis

Answer 8

Other basis is used to define a set of reasonable criteria applied to all material items in the FS.