The Private Company Financial Reporting Committee met to discuss the impact of recent changes in accounting standards on private companies, including some confusion in the Financial Accounting Standards Board’s new Codification updates.

The main topic of discussion was FASB’s disclosure project and how it might affect private companies, according to committee chair Judy O’Dell. The committee discussed at great length the future of private company accounting, especially now that the International Accounting Standards Board has issued its IFRS for SMEs, or International Financial Reporting Standards for Small and Medium-sized Enterprises. O’Dell noted that Canada has opted to use its own set of standards for private company GAAP rather than IFRS for SMEs, even though Canada plans to adopt IFRS for public companies in 2011.

The PCFRC talked about not only Canada’s approach, but also that of the United Kingdom, where midsized and larger private companies will use IFRS for SMEs, but the smallest companies won’t, and South Africa, which will generally use IFRS for SMEs at private companies.

“We talked about what the U.S. should do and who should do it, but we didn’t reach any conclusions,” said O’Dell. The AICPA Fall Council meeting discussed similar concerns earlier this week (see Private Cos. Reporting Head: Now Is Time for Separate GAAP!).

“A lot of Council members said it’s time to look for a separate set of accounting principles for private companies and authorized the AICPA to cover it,” said O’Dell.

The PCFRC also discussed the liabilities and equities convergence project that FASB and the IASB have been pursuing. “We liked what we saw in the proposal,” said O’Dell.

However, the committee did have some quibbles with the recent FASB Codification of accounting standards, and the new format used for updates.

“The other thing we talked about was the way that the accounting standards updates coming out of FASB are difficult to read, and we’ll probably make some suggestions to FASB to make them easier to read and understand,” said O’Dell. “Unlike before, when it was a self-contained standard, they have an ASU [accounting standards update], which itself is not GAAP but talks about how the Codification will change. The way it’s done is difficult to read, and we’re making some suggestions there.”

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