The Texas Society of CPAs executive board has adopted a resolution in support of the implementation of a new GAAP model for private companies.
The TSCPA said it has long supported the development of accounting standards that meet the needs of privately held companies in the United States, especially those that are the backbone of the economy, and are not adequately served through current GAAP financial statements.
The Blue-Ribbon Panel on Standard Setting for Private Companies released a report Wednesday urging the Financial Accounting Foundation to establish a separate standards-setting board for private companies apart from the Financial Accounting Standards Board, which currently sets standards for both public and private companies under the FAF’s auspices.
However, one of the three sponsoring organizations behind the Blue-Ribbon Panel, the National Association of State Boards of Accountancy, has reservations about establishing a separate board, with NASBA chairman Billy Atkinson warning that it could lead to confusion and “unintended consequences” (see Blue-Ribbon Panel Recommends Private Company Board).
The TSCPA said it encourages the implementation of a different GAAP model for private companies as determined by a separate private company accounting standards board, however, and is urging all TSCPA members to communicate with the FAF to support its formation. The FAF is expected to make a decision by this summer on whether or not to establish a separate board.
In addition, the TSCPA executive board said it fully supports and expresses appreciation to the Blue-Ribbon Panel formed by American Institute of CPAs, the FAF and NASBA for their recent recommendation that the Financial Accounting Foundation create a separate board to establish private company accounting standards. The AICPA is firmly behind the recommendation to create a separate board, with AICPA president and CEO Barry Melancon calling FASB's recent efforts to do more outreach to private companies "good, but insufficient."
The FAF’s board of trustees is scheduled to discuss the report and recommendations of the Blue Ribbon Panel at a meeting on February 15. Passing of the report from the panel to FAF represents a significant step in the process to bring historic change to private company financial reporting, making it more meaningful for owners, lenders, investors and other users of private company financial statements.
The FAF is expected to issue a proposal for public comment this spring. CPAs are vitally important in transforming the panel’s recommendations into reality, the TSCPA noted. To change private company financial reporting, the TSCPA is encouraging CPAs to provide comment letters in support of the panel’s recommendations and urging small business owners, lenders and bankers, investors such as private equity and hedge fund managers, and other users to respond to the FAF’s proposal as well.
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