Talking Shop Blog

Last week we covered the Financial Accounting Foundation decision to establish a “Private Company Standards Improvement Council” (PSCIC).

Now the AICPA has weighed in, and this from Barry Melancom, AICPA President and CEO:

“On Oct. 4, FAF released its proposal creating a new Private Company Standards Improvement Council. While the PCSIC would report into the FAF (through a subgroup of the Board of Trustees) and not the Financial Accounting Standards Board, its decisions would be subject to ratification by the FASB. That is unacceptable to us.”

You can find the full AICPA response at http://blog.aicpa.org/2011/10/aicpa-tells-faf-independent-board-is-needed-for-private-company-reporting.html

The PSCIC may be a small step in the right direction.

But private companies – and the users of their financial statements – would be best served by an independent board – separate from FASB.

We encourage everyone to contact the FAF to comment on this important issue.

The AICPA has provided an easy-to-use sample letter assistant which you can find at https://apps.aicpa.org/pcfr/

We’ve asked this question before:

Should there be one set of financial reporting standards for large publicly traded companies (“Big GAAP”) and a separate set for smaller privately held companies (“Little GAAP”)?

Our answer, which is widely shared, is a definitive Yes!

The Financial Accounting Standards Board (FASB) has long held the belief that “one size fits all” for financial statement reporting and accounting standards.

But the needs of financial statement users are often different for public companies than for private companies. And the complexities of financial reporting standards have grown dramatically in the post Enron era.

Recently the AICPA endorsed the recommendations of a Blue Ribbon Panel to create a new private companies board (separate from FASB) and modify financial reporting and accounting standards where warranted for private companies.

The Financial Accounting Foundation (FAF) – which oversees FASB – has reviewed this important issue and made its decision.

FAF plans to establish a “Private Company Standards Improvement Council” (PSCIC) to improve the standard-setting process for private companies.

The PSCIC, under the oversight of the FAF, will identify and vote on standards that require modifications to or exceptions from GAAP, that will then be subject to public comment and ratification by the FASB.

A step in the right direction.

You can find out more about the new PSCIC, including a News Release and Executive Summary, at http://www.accountingfoundation.org/cs/ContentServer?site=Foundation&c=Page&pagename=Foundation%2FPage%2FFAFSectionPage&cid=1176158985794

Here’s a question we’ve asked more than a few times:

Should there be one set of financial reporting standards for large publicly traded companies (“Big GAAP”) and a separate set for smaller privately held companies (“Little GAAP”)?

Another question:

Wouldn’t we all benefit if the accounting standards and financial reporting requirements for private companies address private company needs without the burden (and related costs) of public company reporting?

The answer to both? Yes!

We said yesterday – we’re thisclose to seeing Little GAAP become a reality.

The AICPA has endorsed the recommendations of a Blue Ribbon Panel to create a new private companies board and modify financial reporting and accounting standards where warranted for private companies.

The Financial Accounting Foundation (FAF) will soon issue its proposal and action plan on these historic Blue Ribbon Panel recommendations.

The Foundation wants to hear from financial statement users, including lenders, business owners and other interested parties. We encourage everyone to contact the FAF to support the Blue Ribbon Panel recommendations.

The AICPA has provided a sample letter assistant which you can find at https://apps.aicpa.org/pcfr/.

Please take a few minutes to complete and e-mail the letter.

We’ve been waiting for this since the mid 70s and we’re thisclose.

You can find a summary report at http://www.duganlopatka.com/images/PDF/aicpa_call_to_action.pdf

The full FAF report is available at http://www.accountingfoundation.org/cs/ContentServer?site=Foundation&c=Document_C&pagename=Foundation/Document .

The Financial Accounting Standards Board (FASB) has long held the belief that “one size fits all” for financial statement reporting and accounting standards.

But the needs of financial statement users are often different for public companies than for private companies. And the complexities of financial reporting standards have grown dramatically in the post Enron era.

So should there be one set of financial reporting standards for large publicly traded companies (“Big GAAP”) and a separate set for smaller privately held companies (“Little GAAP”)?

Our answer, which is widely shared, is a definitive Yes!

The AICPA has endorsed the recommendations of a Blue Ribbon Panel to create a new private companies board (separate from FASB) and modify financial reporting and accounting standards where warranted for private companies.

The Financial Accounting Foundation (FAF) – which oversees FASB – will soon issue its proposal and action plan on these historic Blue Ribbon Panel recommendations.

We’re thisclose to seeing Little GAAP become a reality. However, that will only happen if enough interested parties express their views to the Financial Accounting Foundation on this important issue.

We encourage everyone to contact the FAF to support the Blue Ribbon Panel recommendations.

The AICPA has provided a sample letter assistant which you can find at https://apps.aicpa.org/pcfr/

More on this very important topic tomorrow.

We’ve posed this question before:

Should there be one set of financial reporting standards for large publicly traded companies (“Big GAAP”) and a separate set for smaller privately held companies (“Little GAAP”)?

And our answer, which is widely shared, is a definitive Yes!

The needs of financial statement users are often different for public companies than for  private companies. And the complexities of financial reporting standards have grown dramatically in the post Enron era.

A blue ribbon panel was formed some time back to provide recommendations on the future of U.S. accounting standards for private companies.

The panel meets today with the AICPA, and by day’s end we may have a consensus on moving forward with new financial reporting standards for private companies.

You can find out more about the issues and today’s important meeting at http://www.journalofaccountancy.com/Web/20103416.htm .

A few weeks back we posed this question:

What’s tougher to understand? Tax Law or GAAP (Generally Accepted Accounting Principles).

We never quite answered the question, but for some thoughts on Extreme Accounting check out our blog at http://blogs.duganlopatka.com/general/2010/06/08/extreme-accounting-tax-vs-gaap/

Here’s another GAAP question:

Should there be one set of financial reporting standards for large publicly traded companies (“Big GAAP”) and a separate set for smaller privately held companies (“Little GAAP”)?

Our view, which is widely shared, is a definitive Yes!

The needs of financial statement users are often different for public companies than for  private companies. And the complexities of financial reporting standards have grown dramatically in the post Enron era.

A blue ribbon panel was formed some time back to provide recommendations on the future of U.S. accounting standards for private companies.

And the panel is looking for public feedback from the preparers and users of financial statements for private companies.

For more background information on this important project check out http://www.journalofaccountancy.com/Web/20103123.htm

And you can submit your comments by going to http://www.fasb.org/cs/ContentServer?c=Page&pagename=FASB%2FPage%2FSectionPage&cid=1176157170731