Modified Statements for NPEs

BY NEVILLE GRUSD

I fully agree with the sentiments expressed in the letter “ Different Standards for Nonpublic Companies? ” ( JofA , Jan.06, page 11). I have been financing nonpublic businesses for banks and finance companies and rely on financial statements to make credit decisions.

In particular I agree that the idea of different standards for different sizes or types of companies is extremely dangerous. Where will it end? What all users want is an accurate financial statement, and the same principles apply to all of them.

If the cost of compliance with a particular disclosure rule is out of proportion to the benefit, then the accountant preparing a statement for a credit grantor should leave it out and qualify his opinion accordingly, preferably with the prior approval of the user. My experience is that very few nonpublic companies have the items, such as stock options or pension funds, that give rise to additional disclosures and costs. It would be up to the credit grantor to accept or not accept a modified statement. I believe this approach would be preferable to tinkering with GAAP.

Neville Grusd, CPA
Executive Vice President
Merchant Financial Corporation
New York City

SPONSORED REPORT

How to make the most of a negotiation

Negotiators are made, not born. In this sponsored report, we cover strategies and tactics to help you head into 2017 ready to take on business deals, salary discussions and more.

VIDEO

Will the Affordable Care Act be repealed?

The results of the 2016 presidential election are likely to have a big impact on federal tax policy in the coming years. Eddie Adkins, CPA, a partner in the Washington National Tax Office at Grant Thornton, discusses what parts of the ACA might survive the repeal of most of the law.

QUIZ

News quiz: Scam email plagues tax professionals—again

Even as the IRS reported on success in reducing tax return identity theft in the 2016 season, the Service also warned tax professionals about yet another email phishing scam. See how much you know about recent news with this short quiz.