What does regulatory basis mean on the CPA exam?
Regulatory basis. A special-purpose framework required by a regulator, such as an insurance department's rules. Not GAAP, and the report has to say who may use it.
Defined against AU-C 800.07.
Which CPA exam sections use regulatory basis?
Regulatory basis appears in the FAR section of the CPA exam.
Other terms defined against AU-C 800
- cash basis: Recognizing revenue when cash is received and expense when cash is paid.
- contractual basis: A special-purpose framework built from the terms of a contract, used when two parties agree how the numbers will be prepared for their own purposes.
Related terms
- applicable financial reporting framework: The framework management adopts for the statements, such as GAAP or a special purpose framework.
- adjusted basis: What the taxpayer has invested in property for tax purposes: cost, plus improvements, less depreciation taken.
- basis of accounting: The rule for WHEN something is recorded: cash when money moves, accrual when it is earned or incurred, modified accrual somewhere between.
- carryover basis: Basis that follows the property from the previous owner instead of resetting to what was paid.
- debt basis: An S corporation shareholder's basis in loans they personally made to the corporation.
- inside basis: The partnership's own tax basis in the assets it holds.