This weekend marks the start of spring. Each year this change in the season provides a belief that we will shake off the effects of winter and find better days ahead. And after the winter we had this year in Texas, it will be especially sweet to see the flowers and trees in bloom and hear a chorus of birds in the air.
This spring also provides us with a sense of renewed hope that we may see progress on the issue of financial reporting for private companies. I wrote about this issue in a blog post about a year ago (“Groundhog Day for Standards”) when the announcement was made that the AICPA , Financial Accounting Foundation (FAF), and the National Association of State Boards of Accountancy (NASBA) had collectively appointed a Blue Ribbon Panel (BRP)to study the issue.
The BRP has done a lot of work and held a lot of meetings over the past year, and it issued a report and recommendations in January. The FAF reviewed the BRP’s report, and, at a meeting earlier this month, announced it was forming a Trustee Working Group to address standard setting for private companies as well as nonprofit organizations, which were not part of the BRP’s charge. This new Working Group will conduct outreach to stakeholders in various ways over the upcoming months, so be on the lookout for news and your opportunity to weigh in.
In case you missed the BRP’s report, they are making two major recommendations. First, that a separate standard setting board be created for private companies that would operate under the oversight of the FAF, similar to the FASB. Second, that there be changes and modifications to existing GAAP, where appropriate, for private companies to reflect the needs of their financial statement users. There would not be an entirely new GAAP for private companies, but rather appropriate exceptions from GAAP in areas that do not make sense or provide value for users of financial statements.
It is critical that CPAs and the clients/users of financial statements for private companies (and now nonprofit organizations) let the FAF and this new Trustee Working Group know how they feel about this issue. TSCPA did that back in January when our Executive Board adopted a resolution saluting the work of the Blue Ribbon Panel and encouraging a new approach to standards for private companies that better serve their needs. You can read the resolution here.
The FAF Trustee Working Group will be seeking input over the upcoming months. If you or your clients have an opinion on this issue, you need to take the time to write to the FAF and share it. We are getting close to the finish line now, and it will require a grassroots effort to carry this issue to fruition. This is your opportunity to make a difference and help secure a new approach to financial reporting for private companies. Please make your voice heard.