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FINANCIAL REPORTING

FASB Seeks Input on Private Company Accounting Issues at Public Meetings

 

By ALEXANDRA DEFELICE
SEPTEMBER 13, 2010

FASB will hold two public round-table meetings to discuss issues related to private company financial reporting. 

 

The first meeting is Oct. 12, 1 p.m. to 4 p.m. at FASB’s offices in Norwalk, Conn. The second meeting is Nov. 2, 9 a.m. to noon in Dallas. The exact location of the Dallas meeting has not yet been announced.

 

Issues to be discussed at the round-table meetings are expected to include, but will not be limited to, Consolidation (Codification Topic 810, originally issued as FASB Interpretation no. 46(R)) and Income Taxes (Codification Topic 740, originally issued as FASB Interpretation no. 48).

 

The purpose of the meetings is for FASB to discuss private company accounting and reporting issues with a wide variety of stakeholders, including private companies, their CPAs, and users of private company financial statements, according to Jeffrey Mechanick, FASB’s assistant director for nonpublic entities. “We want to hear a variety of perspectives on how high-quality financial reporting can be achieved while taking into account the specific needs of the private company sector,” he said in a written statement.

 

Any private company stakeholders interested in participating can e-mail: director@fasb.org.  Those interested in observing the round-table meetings must preregister for specific sessions by filling out a form on FASB’s website. Since seating is limited, no more than three observers from the same organization may attend. Each session will be audiocast live at fasb.org.

 

The meetings are part of a series of such forums planned for the fall that are designed to provide interested stakeholders the opportunity to express their views on various FASB issues.

 

Deadline Nears for Blue-Ribbon Panel Feedback

 

Feedback from the round-table sessions will go to a blue-ribbon panel tasked with providing recommendations by the end of this year on the future of U.S. accounting standards for private companies. The panel is still seeking comments on a series of questions related to how accounting standards can best meet the needs of U.S. users of private company financial statements. The panel is reaching out to users of private company financial statements, as well as preparers and practitioners.

 

The questions, which are posted on fasb.org, include:

Users (e.g., lender, surety, investor, owner) only:

  1. a) Briefly describe how you use GAAP financial statements in your decision-making concerning private companies.

    b) Tell us about any issues or concerns that you may have with respect to the relevance of the information contained in those statements.  Please be as specific as possible in your answer.

    All respondents:

  2. a) Tell us about any issues or concerns you have with current U.S. GAAP accounting standards as those standards apply to private company financial statements.

    b) Are those issues or concerns confined to one or more specific standards, or are they more systemic?

    c) Do you believe that those issues or concerns are largely confined to private companies, or are they broader?
  3. What short-term and/or long-term actions do you believe are necessary to address those issues or concerns?
  4. a) To what extent, if any, would an SEC requirement for public companies to adopt IFRS at a date certain affect your answers above?  Why?

    b) To what extent, if any, would other outside factors affect your answers above?  Which factors and why?
  5. Is there any other input that you'd like to convey to the panel?

If you or your organization would like to submit responses, e-mail them to Tim Woo at tswoo@fasb.org, no later than Sept. 15. All submissions will be considered public and will be accessible via FASB’s website. Respondents also will be asked to fill out a questionnaire about their company, but the information on that questionnaire will not be posted to the website.

 

A summary of the responses received through Sept. 15 will be prepared and distributed to panel members and participating observers. The summary will be included as part of the observer notes (a publicly available meeting handout) for the panel’s next meeting, which will take place Oct. 8 at the AICPA’s New York City office.

 

At its last meeting on July 19 in Chicago the 18-member panel weighed in on seven alternative models for private company financial reporting, eliminating models that were based on IFRS and a model that effectively would have maintained the status quo.

 

All of the remaining models under consideration by the panel would result in differences in GAAP for private companies, where warranted, compared with GAAP for public companies.

 

The three primary models that are advancing for more consideration are:

 

  • U.S. GAAP with exclusions for private companies—with enhancements
  • U.S. GAAP—baseline GAAP with public company add-ons
  • Separate, stand-alone GAAP based on current U.S. GAAP

 

More information can be found in the JofA’s September 2010 article, “Blue-Ribbon Panel Narrows Field for Private Company Financial Reporting.”

 

The panel is part of a joint effort by the AICPA; the Financial Accounting Foundation (FAF), FASB’s parent organization; and the National Association of State Boards of Accountancy. Panel Chairman Rick Anderson, chairman and CEO of Moss Adams LLP and a current FAF board member, said he would like any recommendations to be ironed out by the panel’s Dec. 10 meeting. The recommendations will then be presented to FAF.

 

More information about the panel is available on FASB’s website.

 

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