Chair's Letter February 2010 

by Robert R. Harris, CPA/CFF, Chairman, AICPA Board of Directors 
Published February 02, 2010

I want to tell you about a very positive recent development that could transform the financial reporting system for many of the nation’s 29 million private companies and the CPA firms who serve them. A new Blue Ribbon Panel will take a fresh look at how U.S. accounting standards can best meet the needs of private company financial statement users and expects to make recommendations this year. A survey of governing Council members at our Oct. 2009 meeting showed overwhelming support for exploring different accounting standards for private companies and our board of directors approved a resolution to form the panel at its meeting the following month. The Financial Accounting Foundation, which oversees the Financial Accounting Standards Board, also approved such a resolution in Nov. 2009.

Creation of the panel was jointly announced in Dec. 2009 by the AICPA and the Financial Accounting Foundation with support from the National Association of State Boards of Accountancy. Last month Rick Anderson, CPA, chairman of the firm of Moss Adams LLP, was appointed chairman of the panel [an interview with Anderson appears in the Journal of Accountancy]. Other members to serve are in the process of being named.

According to Small Business Administration statistics, small businesses employ more than half of all private sector workers and are responsible for 44% of the private payroll in this country. They have also created 64% of the new jobs in the United States during the last 15 years. They have been instrumental in many new innovations and are an important element in our economic recovery.

That the nation’s economic vitality relies so heavily on small business is why the AICPA believes our country needs a financial reporting system that provides financial statement users and small business owners with the information they truly can use and understand. We CPAs know full well that the financial reporting needs of our private company clients or employers and their financial statement users are different from those of public companies. It’s time for accounting standards to reflect this difference.

The panel’s findings and recommendations will be a welcome addition to the work of the Private Company Financial Reporting Committee. The PCFRC, a joint initiative of the AICPA and the FASB, has for the last several years monitored standard setting and spoken out on behalf of the needs of private companies and the CPAs who serve them. In recent months, the PCFRC has added its voice to the many calls within the accounting profession for a new and comprehensive evaluation of private company accounting. Its work on important proposed and existing standards continues.

I believe that establishment of this special panel is a major step toward a financial reporting system that brings valuable information to the users of private company financial statements and does not burden these companies and their CPAs with requirements that have no relevance to their investors, lenders and other financial statement users. It most likely will help control financial reporting costs as well, something I am sure our members in business and industry would appreciate. CPAs serving private companies will be freed up to help clients address the unique challenges they face and seize new opportunities. I will keep you updated on the panel’s work as it proceeds.


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