FASB’s parent organization, the Financial Accounting Foundation (FAF), said Friday it is forming a working group to review the adequacy and effectiveness of FASB’s efforts in setting standards for the private company and nonprofit sectors.
The creation of the working group follows the release earlier this year of a report by a blue-ribbon panel charged with examining the 30-year-old debate over private company accounting standards. The panel was sponsored by FAF, the AICPA and the National Association of State Boards of Accountancy. Among other recommendations, the report urged FAF to create a board separate from FASB that would set private company reporting standards.
FAF says the working group is the next phase of its review. The group intends to issue an action plan in six to eight months on whether or how to devise rules that differ from those of public companies, according to Christine Klimek, a FAF spokesperson.
The group, whose members have yet to be announced, will consist of FAF trustees and staff, Klimek said. It will conduct outreach to stakeholders through roundtable meetings, surveys and meetings with advisory and constituent groups and others. In conjunction with obtaining input on the scope of the issues and concerns to be addressed, FAF will seek input on suggested improvements, including the solutions recommended by the blue-ribbon panel.
“The FAF Trustees’ initiative to review the unique needs and challenges of non-profit entities and private companies is part of our commitment to ensuring that the processes and resources are in place to meet the financial reporting needs of all providers of capital, preparers of financial statements, auditors, regulators, and others,” John J. Brennan, FAF’s chairman, said in a press release.
"We applaud the FAF for taking an initial step toward implementing the Blue Ribbon Panel’s recommendations to create a more workable system for private company standard setting,” said AICPA President and CEO Barry Melancon. “While we appreciate the Trustee Working Group must do their own due process, we urge them to move briskly in making changes to current and future accounting standards that will be more relevant and cost-effective to private company reporting constituencies by establishing a new board as was recommended by the diverse membership of the Blue Ribbon Panel.”
See videos of Institute and profession leaders explaining the blue-ribbon panel’s recommendations at aicpa.org/privateGAAP.
For updated and archived news about the panel’s recommendations, visit journalofaccountancy.com/Web/BRP.htm.
—Matthew G. Lamoreaux (email@example.com) is a JofA senior editor.
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