A new panel is poised to take on the issue of whether separate accounting standards are needed for private companies.
The AICPA and the Financial Accounting Foundation, FASB’s parent organization, announced Thursday the launch of a blue-ribbon panel charged with making recommendations on the future of standard setting for private companies. The National Association of State Boards of Accountancy is also a sponsor of the panel.
Over the past several decades other groups have wrestled with questions about accounting standards for U.S. private companies, but much of that work has focused on technical issues. AICPA CEO and President Barry Melancon said this panel—with support from bodies representing standard setters, the CPA profession and state regulators—is unique and holds greater potential for significant movement than any previous effort.
“There has never been an effort at this level to address this issue,” Melancon said.
While no deadline has been set for the panel’s work, Melancon said recommendations are likely to come in 2010. “This is not a multi-year project,” he said.
The chairman and members of the panel will be named in January. The size of the group has not been determined, but it will include members representing a variety of financial reporting constituencies, including lenders, investors and owners as well as preparers, auditors, and regulators.
“There is a broad consensus within the accounting profession that this new panel is a prudent idea,” FAF President Terri Polley said. “The need for this panel was detailed by the Private Company Financial Reporting Committee and many others during FAF’s recent nationwide outreach meetings.”
This fall, the AICPA’s governing Council overwhelmingly supported exploring different accounting standards for private companies. “In October, AICPA’s Council was passionate about this issue,” AICPA Chairman Robert R. Harris noted. “I know they will view this announcement as positive progress on the feedback they gave us during that meeting.”
The AICPA Board and the FAF Board of Trustees approved resolutions to form the panel in November.
David Costello, NASBA’s president and CEO, called the panel’s mission “a comprehensive review of the process for setting accounting standards for private companies.”
Melancon said all potential solutions are expected to be on the table as the panel begins its work. “There is definitely a lot of passion about this issue and, as a result, any possible outcome that can address those concerns is in the realm,” he said.