OCBOA FINANCIAL STATEMENTS: FREQUENTLY ASKED QUESTIONS PART II

Following are some additional issues in which questions have risen in regards to “other comprehensive basis of accounting (OCBOA).

Q: Do the consolidation of variable interest entities requirements in U.S. GAAP need to be incorporated into OCBOA statements?

A: No. Financial statements prepared on a tax basis incorporate the consolidation of affiliated entities based on the provisions of income tax laws and regulations.  And, there is no need to address the consolidation of variable interest entities in cash basis statements.
Essentially, some of the more challenging requirements associated with reporting entities needing to consolidate variable interest entities do not need to be considered when financial statements are prepared using an OCBOA.

Q: Do the disclosure requirements associated with management evaluating subsequent events in U.S. GAAP need to be incorporated into OCBOA statements?

A: Yes. Disclosure requirements associated with subsequent events are the same without regard to whether financial statements are prepared using U.S. GAAP or either the income tax basis or the cash basis of accounting. Essentially, from a disclosure perspective, there is no difference in how subsequent events issues should be addressed.

Davis & Hodgdon Associates CPAs can help address any questions you have regarding OCBOA and any general financial statement questions.  Visit www.dh-cpa.com or call 802.878.1963.

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