One of your small business tax clients asks you to prepare and report on a set of financial statements. Because you’re familiar with the company, you know it has entered into an interest rate swap to lock in a low rate. The company also has a significant amount of goodwill and other intangible assets that may be subject to impairment as well as considerable fixed assets still subject to depreciation. It wants financial statements the company’s owners and executives can easily understand. You wonder whether there is a way to comply with the client’s request that is both cost-effective and less complicated than GAAP-based financial statements. Before you turn down the engagement, you might want to consider preparing and reporting on the financial statements using an “other comprehensive basis of accounting” (OCBOA). In situations where GAAP-basis statements aren’t necessary because of loan covenants, regulatory requirements or similar circumstances, an OCBOA may just be the answer........
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