The board of directors of the National Association of State Boards of Accountancy voted at its annual meeting to support the Financial Accounting Foundation’s recent proposal to establish a Private Company Standards Improvement Council.
The FAF trustees issued the proposal last month for the new council, but quickly attracted criticism from the American Institute of CPAs for not creating a separate board for private company standards, independent of the Financial Accounting Standards Board, as recommended in a report by a Blue Ribbon Panel on Standard Setting for Private Companies. However, under the proposal by the FAF, which oversees FASB, any changes approved by the new council would still be subject to ratification by FASB. In contrast to the AICPA, which issued a resolution disapproving of the FAF recommendation at its Fall Meeting of Council and threatening to set up its own standard-setting board or committee, the NASBA board instead said it supports the FAF process (see AICPA Issues Ultimatum on Private Company Accounting Standards).
At its meeting on Friday, Oct. 21, the NASBA board authorized the president and chair to communicate the following to the FAF, according to NASBA’s blog: “The board of directors agrees with and commends the FAF process; acknowledges the sovereignty of state boards’ independent actions and authority to fulfill their responsibilities pursuant to Sarbanes-Oxley Section 209, pertinent state laws and the 10th Amendment to the U.S. Constitution; supports the conclusions of the FAF as exposed in its ‘Plan to Establish the Private Company Standards Improvement Council’; and supports and intends to monitor the accountability measures contained therein to ensure the Improvement Council will accomplish its objectives.”