OUR THOUGHTS ON:

Private Company Financial Reporting

Audit

By Donald Applegarth

The Financial Accounting Foundation’s Board of Trustees has discarded the Blue-Ribbon Panel's recommendation to create a new, independent board, to be overseen by the FAF, that would focus on making exceptions and modifications to U.S. GAAP for private companies.

The creation of the Blue-Ribbon Panel in December 2009 had been a joint effort of the FAF and the American Institute of Certified Public Accountants (AICPA). The AICPA is now disappointed that the main recommendation of the report resulting from this joint effort and published in January 2011 was disregarded by the FAF Trustees. In a statement from Barry Melancon, AICPA President and CEO, and Paul Stahlin, AICPA Chair, this disappointment is voiced:
"We are profoundly disappointed that the Financial Accounting Foundation (FAF) is not proposing to create a new independent board to set differences in U.S. GAAP standards, where appropriate, for privately held companies. This was the cornerstone of the Blue Ribbon Panel on Standard Setting for Private Companies' report.

Unfortunately, FAF's proposal has failed to accept the views of the many voices of the private company constituency asking for a separate board. We don't think the concerns of smaller private companies can be fully appreciated until there is an independent board dedicated and focused solely on the needs of private companies."

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