What is a Special Purpose Framework?

A special purpose framework is a non-GAAP financial reporting framework that employs either a cash, tax, regulatory, contractual, or other basis of accounting. These frameworks are designed for a more specialized audience than one of the general-purpose frameworks, such as generally accepted accounting principles (GAAP).

The nature of a special purpose framework can alter the content and format of an entity's financial statements and accompanying disclosures. The type of special purpose framework should be stated in the compilation, review, or audit report that an auditor issues; additional disclosures may be needed.

Example of a Special Purpose Framework

Here are several examples of special purpose frameworks:

A tax basis of accounting is used to file an organization’s tax return for the period covered by its financial statements.
A regulatory basis of accounting is intended to force the reporting entity to comply with the requirements of a specific regulatory agency.
A contractual basis of accounting forces the reporting entity to report just those costs associated with a specific customer contract, which the customer uses to determine whether the contract-specific costs billed to it are valid.