As the SEC resurrects its focus on the roadmap to adopt International Financial Reporting Standards, the 30-plus year debate over a GAAP for private companies has progressed somewhat but remains on the back burner amidst legislative and standard-setters’ priorities for global convergence

“Now is really the time to consider a separate GAAP,” said Judith H. O’Dell, chair of the Private Company Financial Reporting Committee, a joint task force between the American Institute of CPAs and the Financial Accounting Standards Board. “It’s very hard to change a standard once it’s been issued, so that’s why we have concentrated our efforts on projects in progress. The needs of public investors and analysts have always taken priority.”

O’Dell made her remarks before several hundred attendees at the fall meeting of governing council of the AICPA, here.

At its fall meeting in 2005, the AICPA council passed a motion to establish a task force to explore the financial reporting needs of private firms. In 2007, the PCFRC was formed. Since then, the 12-member committee has held 13 meetings.

O’Dell referenced for conference-goers a recent study conducted by Big Four firm Deloitte, which showed that 51 percent of the respondents indicated the need for a separate GAAP for private companies.

“Acceptance of GAAP exceptions is increasing, so with enough exceptions, our question is when does it stop becoming GAAP?” she asked.

O’Dell said that the PCFRC has focused its efforts on such areas as financial statement presentation, liabilities and equity, lease accounting, loss contingencies and revenue recognition.

In July, the International Accounting Standards Board issued IFRS for SMEs (small and medium enterprises), but O’Dell noted that several international bodies such as the Canadian Accounting Standards Board would not adopt it.

She also said that FASB is in the process of assembling a similar group to the PCFRC but it will instead focus on the not-for-profit sector.

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