Big GAAP VS Little GAAP

Question 1

Issue

Answer 1

Should we have one set of standards for large publicly traded companies and one set for smaller non-public entities?

Question 2

Uses - Which types of companies use which GAAP?

Answer 2

Big GAAP: large publicly traded companies aka normal GAAP

Little GAAP: small to medium private industries

Principle based; no industry specific guidance.

Fewer disclosures and less detailed measurements for some assets and liabilities

Basically, take Big GAAP and skinny it down

Question 3

Standard Setting Bodies

Answer 3

Big GAAP: FASB (Big FASB)

Little GAAP: Little FASB - a different standard setting body from our curent FASB.

Question 4

Risks

Answer 4

Goal Setting Risks
solution - suitability
solution - acceptability

Process Risks:
solution - development
solution - implementation

Question 5

Goal Setting Risks

Answer 5

solution - suitability: setting the wrong goal that will be ineffective or unfit for solving the particular problem.

solution - acceptability: defining a target solution that will be rejected by the stakeholders

Question 6

Process Risks

Answer 6

solution - development: developing a process that will be ineffective or unfit for solving the particular problem.

solution - implementation: danger of implementing a process that cannot succeed at deploying the developed solution.