Financial Reporting Frameworks
The Standards Used in Financial Reporting
Auditors evaluate financial statements against an applicable financial reporting framework. In the United States, most companies use U.S. GAAP, while some organizations may use IFRS or special-purpose frameworks.
- U.S. GAAP is the primary framework tested on the CPA Exam.
- IFRS is used in many countries outside the United States.
- Special-purpose frameworks include cash basis and tax basis accounting.
- The auditor's opinion references the applicable reporting framework.
Tip
Always identify which financial reporting framework management has used before evaluating financial statements.
Summary
Auditors assess financial statements against an established reporting framework to determine whether they are fairly presented.