The blue-ribbon panel addressing how US accounting standards can best meet the needs of users of private company financial statements continued its discussion of a new standard-setting board for private companies, reaffirming a consensus view reached in October that a separate private company standards board under the oversight of the Financial Accounting Foundation (FAF) should be created. The panel also continued discussion of a new standard-setting model that follows generally accepted accounting principles (GAAP) with exceptions for private companies.
The panel addressed important related issues such as how the new board would work with the Financial Accounting Standards Board (FASB) throughout the standard-setting process, what would be the new board’s mission and structure, and how it would be potentially funded. The panel also began preparation of a draft report containing its recommendations.
The panel is expected to issue the report to the FAF board of trustees in early 2011 and then to the public. After deliberation, the FAF trustees’ resulting action plan is expected to be subject to further input from constituents, including exposing the plan for public comment prior to its being implemented.
The American Institute of Certified Public Accountants (AICPA), the FAF, and the National Association of State Boards of Accountancy (NASBA) formed the panel in 2009. The members of the panel comprise a cross-section of financial reporting constituencies, including lenders, investors, and owners as well as preparers, auditors, and regulators.
Barry Melancon, AICPA president and chief executive officer (CEO), said: “A significant majority of the blue-ribbon panel voted in October to recommend a new model of financial reporting with a goal of more effective accounting standards for private companies. The recommendation includes establishing a separate standard-setting board for private companies under the Financial Accounting Foundation. We believe these proposed changes to the US accounting system would be widely supported by private company financial statement constituents.”
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