The American Institute of CPAs and the Financial Accounting Foundation, which oversees the Financial Accounting Standards Board, are setting up a “blue-ribbon panel” to discuss how U.S. accounting standards can best meet the needs of users of private company financial statements.

The panel will provide recommendations on the future of standard-setting for private companies, including whether separate, standalone accounting standards for private companies are needed.

AICPA president and CEO Barry Melancon acknowledged there have been previous efforts to set standards for private companies, such as the Private Company Financial Reporting Committee, which FASB and the AICPA jointly sponsor. But the new panel will be dealing more with overall policy, as opposed to technical, issues.

“This group is not going to focus on particular standards,” he told WebCPA. “It’s going to be about how standards in general for private companies should be addressed.”

Both the AICPA and FASB have heard from the PCFRC and others about the need for better accounting standards for private companies, and in October, the AICPA’s governing Council overwhelmingly supported exploring different accounting standards for private companies (see Full Agenda at Council). The AICPA board and the FAF Board of Trustees approved resolutions to form the panel in November.

Members of the panel will represent a cross-section of financial reporting constituencies, including lenders, investors, and owners as well as preparers, auditors and regulators. Joining the FAF and AICPA as sponsors of the panel is the National Association of State Boards of Accountancy. Melancon expects the panel will include representatives from banks, which are heavy users of financial statements of private companies, and possibly the Small Business Administration.

They will consider matters such as the International Accounting Standards Board’s recently issued set of International Financial Reporting Standards for Small and Midsized Enterprises, or IFRS for SMEs, but that will depend on the SEC’s approval of the proposed IFRS roadmap. Melancon believes that private companies will want to have the private company accounting standards in place before IFRS is finally adopted by public companies, however.

The chairman and members of the panel will be named in January. Melancon anticipates that the panel will complete its work in 2010.

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