Reiterating the Financial Accounting Standards Board's 2005 goal of simplification, FASB Chairman Robert Herz told attendees at the American Institute of CPAs Spring Meeting of Council that the regulatory climate has reopened such issues as differential standards and the codification of generally accepted accounting principles, thus intensifying the need to hone standards and reduce the number of accounting guidance outlets.
"There's a lot of cross-currents in the profession and water coming out of a lot of places in terms of accounting standards," Herz said during the opening session of the three-day confab. "The question is what do we do with this morass of accounting literature?"
Herz outlined the profession's need to codify GAAP, and outlined FASB's multi-year codification project, where existing standards would be restructured by topic and accompanied by all relevant literature.
"Auditors have become tired and strained and there's a real fear of second-guessing," Herz said. "It's come to the point where they're saying, 'Just give me a rule.'"
With regards to the institute's efforts on differential reporting standards, or standards for non-public companies -- a three-decade-old issue -- Herz told attendees that in the current regulatory environment, differential reporting is an issue that "is certainly worth a re-look."
He recounted the success of international accounting bodies and their subsequent forays into private company standards, such as the U.K.'s Financial Reporting Standards for Small Enterprises, and Canada's accounting organizations soliciting the five major banks for guidelines on differential standards.
"There's a genuine issue here," Herz said.
