Leading view

Users would prefer that all general-purpose external financial statements be prepared using a single set of accounting and disclosure rules (GAAP).

* The use of OCBOA statements is opposed because it inevitably leads to a decrease in the comparability of information among companies [p. 1-2] and users are unable to interpret the reported information [p. 2].

While users prefer GAAP statements, competitive pressures on lenders and sophisticated borrowers sometimes result in acceptance of OCBOA financial statements by creditors.

* Circumstances when OCBOA statements might be accepted include:

* Creditors lending to small companies or for small loans where the risk of loss is limited [p. 2-4, 6]; in those cases, tax-basis statements are commonly accepted [p. 3-4]

* When making ongoing assessments of credit quality of companies operating in specific industries such as insurance companies, banks and bank holding companies [p. 3-4]; in those cases, regulatory reports are commonly accepted to supplement creditors' understanding of GAAP statements [p. 2-3, 5]

* For competitive and cost reasons; for example, when the company does not want to prepare GAAP statements and the creditor is comfortable with the lending decision [p. 2-4]

* When users accept OCBOA statements, they usually require additional disclosures in order to identify amounts accruable under GAAP but not recorded in the OCBOA statements [p. 2, 4-6].