New York-The blue ribbon panel formed in December to address the 30-year-old debate over whether to issue a separate set of reporting standards for private companies is set to address a number of key issues that hopefully will move the protracted discussion to the next level.

The group revealed that it plans to meet four or five times in public meetings, and the key topics that it will address include a closer look at the recently issued International Financial Reporting Standards for Small and Medium-sized Enterprises, the cost of preparing statements in U.S. generally accepted accounting standards, and the problems associated with transitioning from being a private company to being a public one.

At press time, the first meeting was scheduled for April at the headquarters of the American Institute of CPAs. The panel plans to issue a report and recommendations to the Financial Accounting Foundation by the end of 2010.

A move toward private company standards would not necessarily be one to rush into during a period of economic recovery, but panel chairman Rick Anderson, who also serves as chairman of Seattle-based CPA and business advisory firm Moss Adams, said that it may be a perfect time to be asking the right questions.

"First of all, if any change occurs - and I emphasize the if - we're not talking about change in six months," Anderson said. "In some respects, there's no better time to ask questions than in a volatile time, because it exposes any issues that do or don't exist. So maybe this is a great time to do it. We'll see whether or not a separate set of standards could have or would have been more useful for private companies."

By the full agreement of the three sponsoring organizations - the AICPA, the FAF and the National Association of State Boards of Accountancy - the majority of the panel members are users of financial statements. Other members represent auditors and the preparers of financial statements.

One major factor the panel must consider is the recent issuance of IFRS for SMEs by the International Accounting Standards Board. The standard, which public companies in the U.S. have the option of adopting, may provide the information that most users of financial reports need.

Tom Quaadman, executive director of the U.S. Chamber of Commerce's Capital Markets Competitiveness Center, noted that the standard for small and midsized entitites would not necessarily solve the problem.

"It behooves everyone to have the discussion and look at what the International Accounting Standards Board has done," said Quaadman. "One issue we need to address here in financial reporting is something other countries don't have to worry so much about - litigation. We are a litigious society, and our financial reporting has to reflect that."

David Hirschmann, the center's president and chief executive officer, will be representing the U.S. Chamber of Commerce on the blue ribbon panel.

"The question is: What makes sense for the United States in the long run?" Hirschmann asked. "This is less about specific standards and more about how to set standards for private firms. It's possible that at some time in the future, [the Financial Accounting Standards Board] and the IASB could merge, and FASB would go out of business. What do we need here in the United States? This is a perfect time to be asking those questions."

Another question likely to be addressed is how difficult it might be for a company to go public if it has been using standards that are different from those of public companies.

STARTING WITH THE BASICS

Anderson reiterated that while the panel may discuss the usefulness and cost-effectiveness of specific standards, it would do so as part of an analysis of the process that brought the standards into existence.

"Who are the actual users of private company financial statements and how do they use GAAP financials in their decision-making?" asked member Billy Atkinson, chairman of the National Association of State Boards of Accountancy. "What is the key decision-useful information that the various users need from GAAP financials?

Atkinson said that you need to ascertain whether GAAP is meeting users' needs, and whether the benefits of GAAP financials outweigh the cost of preparation.

He added, "To the extent that current GAAP is not meeting user needs in a cost-beneficial manner, what are some possible alternatives for private company standards, such as separate stand-alone standards, base-level standards for all entities with additional disclosure requirements for public companies, and what are the implications for standard-setter structure and processes?"

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