The Texas Society of CPAs has weighed in on the Financial Accounting Foundation’s controversial proposal to set up a Private Company Standards Improvement Council and sent a letter expressing its “respectful disagreement.”
In the letter, the TSCPA avoided the divisive tone of the resolution passed at the American Institute of CPAs’ Fall Meeting of Council, in which the AICPA threatened to give its board the option to set up its own committee or board for setting private company GAAP unless the FAF significantly modified its proposal (see AICPA Issues Ultimatum on Private Company Accounting Standards).
However, the TSCPA still followed the AICPA’s urging that the state societies oppose the FAF proposal on the grounds that it does not go far enough in establishing a separate, independent board that could allow changes in accounting standards for private companies without the involvement of the Financial Accounting Standards Board, which the FAF oversees.
In a Blue Ribbon Panel Report on Standard Setting for Private Companies, the recommendation was to set up a separate board, overseen by the FAF, to set differences in U.S. GAAP for private company accounting standards. The TSCPA, like the AICPA, said the FAF proposal does not abide by the Blue Ribbon Panel’s recommendations. The panel represented a group of private company constituents, including bankers, sureties, venture capitalists, CEOs, tax preparers, CPA practitioners and regulators, who issued a report in January.
According to the TSCPA’s letter, which follows up on earlier correspondence sent in August, the TSCPA noted that the FAF is facing a critical decision on how to solve the issue of private company standards in a way that preserves the integrity of GAAP. In order to do so, an efficient structure is needed so that confidence is provided to private companies and the professionals who serve them.
Furthermore, the TSCPA said it believes in order to accomplish this goal, a separate and autonomous board under the FAF’s direction allows for this to occur, and that the FAF should adhere to the recommendation of the Blue Ribbon Panel.
The TSCPA said it has always supported the need to develop accounting standards to better meet the needs of private companies, especially small businesses that are the driving force behind the economy in Texas and the U.S.
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