Blue Ribbon Panel Looks Into Separate GAAP For Private Companies
By: Gardiner Thomsen CPAs | email
Until recently, U.S. generally accepted accounting principles (GAAP) have long been considered universally acceptable for both publicly and privately held companies. However, there have been growing concerns about the specific needs of privately held companies which must report to a narrower range of financial statement users, such as lenders, venture capitalists, and insurers. Current GAAP and standard-setting processes have been viewed as too complex to be useful for private companies and do not benefit the users enough to justify the costs of compliance. Because of this, the American Institute of Certified Public Accountants (AICPA) and the Financial Accounting Foundation (FAF) have created a Blue Ribbon Panel to explore how the GAAP and standard setting process are meeting private company needs.
In addition to the costs of funding the standard-setting process and educating financial statement preparers, other issues raised by the panel are: whether a separate set of standards would be useful for private companies; if simplified standards would be useful for all companies, both public and private; or if giving private companies the option of complying with either a new set of simplified standards or reporting as a public company under the current set, would be useful. The panel, made up of various groups including lenders, investors, owners, preparers, auditors, and regulators, is most concerned with putting the decision making process in the hands of the users. The panel will meet throughout the year to discuss these issues in depth and make recommendations on how to better serve the financial reporting needs of both publicly and privately held companies, as wells as the preparers and users of those financial statements.
Gardiner Thomsen will be following this issue and will keep you up to date on any progress or changes that will affect your company. In the meantime, if you have any questions, please don’t hesitate to contact us.
