Blue-Ribbon Panel on Private Company Financial Reporting to Meet Monday

A blue-ribbon panel established to provide recommendations on the future of accounting standards for private companies will meet for the first time Monday at the AICPA’s New York office.

The public portion of the meeting will take place from 10:30 a.m. to 4:30 p.m. and will be accessible via live audio stream found here.

In the first half of the public portion of Monday’s meeting Judith O’Dell, chairman of FASB’s Private Company Financial Reporting Committee (PCFRC), will provide an overview of the history on the debate of private company standards within the U.S. financial reporting system and provide a briefing on world actions on private company financial reporting. FASB Technical Director Russell G. Golden will provide a briefing on the current U.S. standard-setting process, and there will be an expert discussion by James Castellano, former chairman of the AICPA’s Private Company Financial Reporting Task Force and 2002 AICPA Board of Directors chairman.

In the second half of the public portion of the meeting, panel members will discuss their views on the following issues:

• Who are the actual users of private company financial statements?
• What is the key, decision-useful information that the various users need from U.S. GAAP financial statements? Is there information you don’t need or can’t get?
• Are current U.S. GAAP financial statements meeting those needs? Why or why not?
• Do you routinely “adjust” the U.S. GAAP financial statements to meet your needs?
• Are you concerned with the cost/benefit issues preparers experience in preparing U.S. GAAP financial statements?

The panel also will set a list of items to be discussed at the next panel meeting, scheduled for May 14.

Members will meet in closed session prior to the open meeting. A copy of the agenda can be found here and links to background material can be found here.

The JofA will cover the meeting via its Twitter handle, AICPA_JofA, with hashtag #brp. Visit journalofaccountancy.com for complete coverage following the meeting.

In December, the AICPA and the Financial Accounting Foundation, FASB’s parent organization, announced the panel’s creation. The National Association of State Boards of Accountancy also sponsors the panel.

The 18 panel members, including AICPA President and CEO Barry Melancon, and participating observers represent a cross-section of financial reporting constituencies, including lenders, investors and owners, as well as preparers, auditors and regulators. It is chaired by Rick Anderson, CEO of Moss Adams LLP. (Click here to read an interview with Anderson.)

During the AICPA 2009 fall Council meeting, the Institute released a survey showing that a vast majority of Council members support U.S. GAAP differences, where appropriate, for U.S. private companies. The panel will be one of the Institute’s top priorities in 2010 and recommendations are likely to come this year, Melancon said.

Additionally, in December, the PCFRC—an advisory group tasked with communicating recommendations to FASB about differences in accounting standards related to private companies based on user needs and cost/benefit considerations—said it “believes that a separate, stand-alone set of accounting standards for U.S. private companies tailored to the needs of the users of those statements is the preferred approach.”

Over 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. Melancon has said this panel is unique and holds greater potential for significant movement than any previous effort.