Ocboa Financial Statement Guidance - Other Comprehensive Basis of Accounting - Brief Article

California CPA, July, 2001

If you prepare financial statements on the cash or tax bases of accounting (also known as "other comprehensive basis of accounting" or OCBOA), You might be surprised to learn that there is authoritative guidance on what is to be disclosed in those financial statements.

Interpretation 14 of SAS 62 (which defines OCBOA) explains that if OCBOA financial statements have elements or accounts that would require disclosures on GAAP statements then the OCBOA statements should have the same disclosures or provide information that communicates the substance of those disclosures. The opposite is also true; GAAP disclosure requirements that are not relevant to balances on OCBOA statements don't have to be considered.

The interpretation states that this guidance also applies to presentation requirements. It gives an example of nonprofit financial statements prepared on the tax basis of accounting. In these statements, total fund balances may be shown on the face of the statements with the necessary information about temporary and permanent restrictions presented in the notes.

Disclosures in OCBOA statements may substitute qualitative information for the quantitative information required by GAAP. Examples of qualitative information are estimated percentage of revenue derived from a related party transaction and repayment terms on long-term liabilities.