The board of the SC Association of CPAs certainly hopes so! At their January 21 meeting, board members voted unanimously to throw their support behind the current effort to create financial reporting standards for private companies.
Why is the current system a problem? Well, not only has the complexity made navigating reporting standards a major challenge, but the current system simply does not take into account the unique needs of private companies and the users of their financial statements (banks, sureties, etc.).
The Financial Accounting Foundation (FASB’s parent organization) released its report of the Blue Ribbon Panel last week. The report concludes that changes are needed with their recommendation of a “separate private company standards board to help ensure that appropriate and sufficient exceptions and modifications are made, for both new and existing standards. That new board would work closely with the FASB to achieve a coordinated and efficient standard-setting process but would have final authority over such exceptions and modifications. A comprehensive review of the new board would be conducted in three-to-five years to evaluate its effectiveness and determine whether to maintain it as is, make additional process improvements, or sunset it.”
The momentum we are seeing indicate that this is perhaps a once in a lifetime opportunity to change the standard setting process — and SCACPA encourages all CPAs (and even your clients) to pay attention, read and understand the proposal and be ready to weigh in when this opens up for comment. We will be asking for your help at the appropriate time!
In the meantime, the folks at the AICPA have released resources that might help you better understand the issue. So, be sure to check it out when you get a chance. (Thanks to MACPA’s CPA Success and AICPA’s Cynthia Lund for the information contained in this blog.)
- The blue-ribbon panel’s report in its entirety
- The AICPA’s private company financial reporting resource center
- FAQs about private company standards
- Barry Melancon’s video overview of the issue
- AICPA Chair Paul Stahlin with the bankers’ perspective
- Report recommends new standard-setting system (from the Journal of Accountancy)
Blogger: Erin P. Hardwick, CAE, Executive Director, South Carolina Association of CPAs