“In today’s business world it is extremely rare to get an overwhelming consensus supporting one idea. However, the responses from the state societies are another example of the CPA profession's overwhelming support for an independent board to set differential standards for private businesses,” said Barry Melancon, American Institute of Certified Public Accountants (AICPA) president and CEO. “The message is clear; FAF must do this now or run the risk of missing our best opportunity to make GAAP relevant for private companies.”
The following states have sent letters to the FAF or passed resolutions in support of the creation of a separate board.
Alabama, Arkansas, Colorado, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Minnesota, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, Wisconsin and Wyoming.
The common sentiment in the states’ letters to FAF was that U.S. generally accepted accounting principles (U.S. GAAP) have become too complex and the cost of financial reporting in accordance with U.S. GAAP for privately-held businesses has become increasingly burdensome with little or no additional value to the financial statement users.
These state societies agree that the time has come for the creation of a separate board under FAF that is attuned to the needs of users and support the report of the Blue Ribbon Panel on Private Company Financial Reporting (the Panel).
In 2009, the AICPA, the FAF and the National Association of State Boards of Accountancy (NASBA) created 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 FASB, to create standards for privately held enterprises.
Nearly 3,000 letters have been sent to FAF from the private company constituency, supporting the creation of a separate board to develop differential standards for privately held companies.
“The boards of more than half of the country’s state CPA societies, representing more than a quarter of a million CPAs, agree that a systemic problem exists,” stated Paul V. Stahlin, chairman of the AICPA. “After over 30 years of research by numerous diverse and independent groups, the only conclusion is that an autonomous standard-setting body under FAF to set differential standards for privately held companies must be created."