The opinion expressed in the article, "It's Time to Simplify Accounting Standards" ( JofA , Mar.99, page 65) is right on target.
The increasing complexity of business transactions in recent years has resulted in a profusion of equally complex accounting rules to accommodate them. It appears that our zealous standards setters choose to add to our mountain of rules rather than try to fit new situations under existing standards.
The problem is even more pronounced in the case of small, nonpublic entities. Most of these companies have a more limited reporting audience, with more limited needs than their largely publicly held counterparts. Nevertheless, they have to follow the same rules.
For years practitioners have advocated exempting the smaller entities from applying those standards that have little relevance to them. What they were looking for was freedom from esoteric rules that do nothing to enhance the quality of financial reporting of nonpublic companies and only result in unproductive time spent on accounting and audit engagements and provoke client irritability.
Accounting standards are overloaded. Let's take a step backwards, review what we have and lighten the load—for the small as well as the large.
Charles Chazen, CPA