Close to 2,500 letters have been written to the Financial Accounting Foundation supporting the creation of a separate standards board for private company accounting, according to the American Institute of CPAs.
At the Spring Meeting of Council, AICPA president and CEO Barry Melancon encouraged CPAs to write to the FAF to encourage it to set up a separate board for standards for privately held companies distinct from the Financial Accounting Standards Board (see Melancon Urges Fight for Private Standards Board).
The AICPA was also one of the organizations spearheading the creation of a Blue-Ribbon Panel that issued a report in January recommending the creation of a separate standard-setting board for private company accounting (see Blue-Ribbon Panel Recommends Private Company Board). The FAF is currently in the process of evaluating the recommendations in the report and has set up a trustee working group to study the issue.
“The board of trustees within the next few weeks is going to be releasing for public comment a proposal on the standard-setting process for private companies,” said FAF spokesman Robert Stewart.
Meanwhile, nearly 2,500 letters have been sent to the FAF about the proposals, the vast majority of which support the creation of a separate board, according to the AICPA. “Ninety-nine percent of the letters from the privately held company constituency demanded that the Financial Accounting Foundation create differential standards for privately held companies,” Melancon said in a statement. “We’ve studied this problem for far too long. Over the years, some changes have been made. But the Blue Ribbon Panel reported that they were insufficient.”
The AICPA has even provided a kind of "toolkit" on its Web site to help members write letters to the FAF in support of a private company board.
The AICPA, the FAF and the National Association of State Boards of Accountancy created the Blue-Ribbon Panel on Private Company Financial Reporting in 2009 to explore the changes necessary to best meet the needs of U.S. users of private company financial statements. The members of the Blue-Ribbon Panel included a cross-section of financial reporting constituencies, including lenders, investors and owners as well as preparers, auditors and regulators. On Jan. 26, 2011, the panel presented its report to the FAF.
The members of the panel overwhelmingly voted for the creation of an independent board, not subject to veto power by FASB, to create standards for privately held businesses. FASB, for its part, has been doing more outreach to private company constituents, including adding a member from the private company world to its board, Reasor’s Holding Company CFO Daryl Buck, while dedicating staff members to private company concerns. FASB has also held roundtable meetings with private company representatiives to learn more about their concerns and it recently set up a portal on its Web site for information related to private company accounting. In addition, the board noted that it has created a resource list of private company contacts who can be consulted for advice when needed.
“While the Institute applauds the recent actions of the FASB to provide relief to private companies, the FAF has yet to agree to a separate board,” said AICPA chair Paul Stahlin. “Now is the time for the FAF to take the bold step of creating a separate board to set relevant standards that privately held companies sorely need. We call upon more CPAs and business leaders within the privately held company constituency to push the FAF to make these changes.”