The Financial Accounting Standards Board and the American Institute of CPAs issued a proposal aimed at improving the financial reporting process for private companies.

The groups are asking for feedback on changes to FASB's standard-setting procedures, which would allow FASB to consider differences in accounting standards for private companies within generally accepted accounting principles.

Under the proposal, FASB would implement certain improvements to enhance the transparency of its standard-setting process for private companies and consider input from private company constituents. Together, FASB and the AICPA would sponsor and fund an 11-member committee to serve as a resource to the FASB and ensure the views of private company constituents are incorporated into the standard-setting process. The AICPA has already begun recruiting a dedicated staff member to assist the committee with its work.

"Private companies are a vital force in our economy," said FASB chairman Robert H. Herz, in a statement. "[The proposal is] the latest step in our effort to explore ways to engage the participation of, and further improve the standard setting process for, our private company constituents."

"The importance of non-issuers to our capital market system cannot be overstated," said AICPA president and chief executive Barry C. Melancon, in a statement. He also noted that while about 17,000 companies are registered with the SEC, there are over 20 million privately-held companies.

The 7-page proposal is available at a joint Web site maintained by the two groups, The comment period, which is open to anyone, ends August 15.

Previously on WebCPA:

Survey Uncovers Wants of Private Company Statement Users (June 5, 2006)

AICPA Task Force: Explore GAAP Changes for Private Issuers! (March 2, 2005)

Survey: SOX Prompting Private Cos. to Revise Accounting (June 16, 2004)

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