FAF says “no” to separate private company standard setting board

I’ve written previously  about the debate over private company reporting and the AICPA’s lobbying of the Financial Accounting Foundation to adopt the Blue Ribbon Panel’s recommendation for a separate standard setting board for private company GAAP.

On October 4, 2011 the FAF came back with an answer: “No”. The FAF instead opted for a separate “Private Company Standards Improvement Council” which would recommend changes to current GAAP for private companies to the FASB. The FASB would than make any changes to GAAP. This model is similar to the EITF model to handle emerging technical issues. Rather than restate or summarize this statement I thought it might be helpful to provide:

A link to the FAF executive summary of their recommendation  

A link to the AICPA’s response.

This story is not necessarily over. The FAF recommendation is open to public comment and as a result it is likely that there will be continued pressure on the FAF to revise their decision. However, the AICPA and private companies have made their voice heard already. I wonder if FAF would actually change its mind, since they resisted the first wave of public outcry for a separate board.


4 Responses to “FAF says “no” to separate private company standard setting board”

  1. 1 Jonathan Ferguson
    October 17, 2011 at 4:51 pm

    This topic continues to evolve. Below is a link to the AICPA’s most recent response. This includes a video by the president of the ACIPA encouraging comment letters to the FAF requesting a separate private company board. The comment deadline is Jan. 14, 2012.


  2. 3 Scott Morrison
    November 30, 2011 at 4:55 pm

    The FAF bent under pressure and decided to ignore the majority and bend to the very small minority for Political reasons with the FASB. This is nothing more than a continuing saga of letting the largest firms dictate standards compliance regardless of the cost/benefit to private company owners and users. I can’t charge thousands and thousands more for a FIN 46 consolidated statment when the banks and surety companies DO NOT want them combined. Right now I have to use exception language which confuses the users and makes it appear that there is a problem not applying FIN 46. This should not be a GAAP issue for a private company. See page 10 of the original Blue Ribbon Report issued January 2011.

    This is a 30 year old issue and the original report issued January 2011 was accurate, complete, well thought out, and included the input of thousands including State CPA Societies. The majority has spoken.

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