Nearly 2,500 Letters have been sent to the Financial Accounting Foundation Demanding the Creation of an Independent Separate Board to Create Different Standards for Privately Held Businesses
According to the AICPA’s Review, 99 Percent are in Favor
Published September 09, 2011
New York – (Sept. 9, 2011) – For almost 40 years, the pleas of private companies to set standards for financial reporting that are more relevant too often have been ignored. The American Institute of Certified Public Accountants (AICPA) believes that it is time for the Financial Accounting Foundation (FAF) to listen to the constituents who have written to FAF demanding differential financial reporting standards for private companies and a separate independent board to oversee those standards. There are approximately 28 million privately held U.S. companies, accounting for more than 50 percent of our economy.
“Ninety nine percent of the letters from the privately held company constituency demanded that the Financial Accounting Foundation create differential standards for privately held companies,” said Barry Melancon, AICPA president and CEO. “We’ve studied this problem for far too long. Over the years, some changes have been made. But the Blue Ribbon Panel reported that they were insufficient.”
In 2009 the AICPA, the FAF and the National Association of State Boards of Accountancy (NASBA) created the Blue Ribbon Panel on Private Company Financial Reporting (the Panel) to explore the changes necessary to best meet the needs of U.S. users of private company financial statements. The members of the Panel were comprised of a cross-section of financial reporting constituencies, including lenders, investors and owners as well as preparers, auditors and regulators. On Jan. 26, 2011, the Panel presented its report to the FAF. The supermajority of the Panel overwhelmingly called for the creation of an independent board, not subject to veto power by the Financial Accounting Standards Board (FASB), to create standards for privately held enterprises.
“While the Institute applauds the recent actions of the FASB to provide relief to private companies, the FAF has yet to agree to a separate board,” said Paul Stahlin, AICPA chair. “Now is the time for the FAF to take the bold step of creating a separate board to set relevant standards that privately held companies sorely need. We call upon more CPAs and business leaders within the privately held company constituency to push the FAF to make these changes.”