The Sharblog

In Good Hands

It has been a busy few weeks of meetings. First, I attended the AICPA Leadership Conference and Council Meeting in Phoenix and then closer to home, I attended a session of our Young and Emerging Professionals Committee where they strategized about future direction and activities for TSCPA to serve this growing and important member segment.

A major impression I was left with after participating in these various sessions was that the accounting profession is in good hands (apologies to Allstate) and is preparing well for its future. Sure, everyone is sort of down right now because of the bad state of the economy and fear of what the future might bring. But while we can’t absolutely predict or shape our future, we can certainly try to be prepared for it, and that preparation is taking place on several levels within the profession.

At the AICPA meeting, we were updated on the AICPA Horizons 2025 Project. This effort was designed to look out into the future (15 years) and provide a roadmap for the profession to help maintain and achieve success. The Horizons Project, with input from thousands of CPAs from around the country, identified the core values and core competencies of the profession.

Core Values: integrity, competence, lifelong learning, objectivity, commitment to excellence, and relevance in the global marketplace.

Core Competencies for CPAs to thrive in the future: communication skills, leadership skills, critical thinking and problem-solving, anticipating and serving evolving needs, synthesizing intelligence to insight, and integration and collaboration.

Some of the key learning points from the Horizons Project are:

• It is a small world after all – every business is becoming global.
• The future is here – embracing the future now will ensure viability in the long run.
• Change is inevitable – technology already is changing the way we work – and will continue to do so.
• Generations are working side by side – Baby Boomers are not retiring and Millennials are bringing a new set of skills and ideals to the workplace.

I got to see some of these Millennials in action at a strategic planning session of TSCPA’s Young and Emerging Professionals Committee this week. They spent a day talking about the strengths and weaknesses of this generation and how TSCPA could utilize their talents to make the Society a better organization that more appropriately serves their needs. The dialogue and brainstorming that took place at this session was impressive. It is clear that this generation is bright and motivated to succeed.

In sports, you need to have a good game plan and good players to win. I think the same applies to the profession. The Horizons Project is the game plan for the profession and our young CPAs are the players we will have to execute it. In looking at both, I like our odds for the future.

(As I write this blog, it is the afternoon before game six of the World Series. So I would be remiss if I did not give a shout out to the American League Champions. Go Rangers!)

One Size Syndrome

Last week, the Financial Accounting Foundation (FAF) issued a proposal to create a new Private Company Standards Improvement Council (PCSIC) responsible for determining whether exceptions to GAAP should be allowed for private companies in appropriate situations. Any recommendations from this new PCSIC would have to be ratified by FASB before they would become effective. 

This proposal runs counter to what was recommended by a Blue-Ribbon Panel on Private Company Financial Reporting (BRP), sponsored by AICPA, NASBA and FAF. The BRP recommended a separate board be established under the auspices of FAF, but with standard-setting authority independent of FASB. TSCPA was also supportive of a separate board and along with thousands of CPAs and financial statement users, encouraged FAF to adopt the BRP’s recommendations.

In issuing the proposal, the FAF trustees concluded that “creating a separate standard-setting board for private companies would likely lead to the establishment of two separate sets of U.S. accounting standards—a so-called “little GAAP” for private companies and a “big GAAP” for public companies, which is not a desired outcome.”

So let me see if I have this right. If we create a new PCSIC under the control of FAF to recommend to FASB when and where there should be exceptions to GAAP for private companies, then we will preserve the purity of GAAP. But if we have a separate board under the control of FAF, do the same thing without getting FASB approval, then all bets are off; GAAP will be diminished and the world will end as we know it?

Talk about form over substance. It is hard not to read this proposal and think anything other than “politics and turf protection for FASB.” The logic is otherwise elusive.

FASB has always had the authority to allow exceptions to GAAP for private companies, but they have chosen not to do so – in the name of uniform GAAP purity I presume. So why would I think a lot is going to change under this proposal, especially if the driving motivator is to avoid the appearance of different standards?

One size rarely fits all. And to force all companies – public and private – to use the same standards, whether they make sense or not, is myopic thinking. The focus should be on developing the best and most appropriate standards for the different types of business entities and the users of their financial information. Likewise, it is difficult to serve more than one master. In the case of FASB, the primary focus should be on public companies. It will be a challenge for them to do that well and also give fair consideration and attention to private companies. A separate board with a separate focus could. It’s too bad that FAF did not see it that way. 

FAF is accepting comments on this proposal until Jan. 14, 2012. If you are interested, please provide your input. You can get a copy of the full report by going to the FAF website at:  www.accountingfoundation.org.