Actually, two things …
First, that the complexity of financial accounting standards for private companies has become a major problem.
And second, that the FASB has not adequately considered the needs of private companies and their users (banks, sureties, small business owners, etc.) and that changes are needed.
The good news is that the FAF (Financial Accounting Foundation) has been listening.
Now, it's our turn to pay attention.
In our fall road shows, more than 1,500 MACPA members weighed in, and over 90 percent said they wanted private company accounting standards. That includes CPAs from business and industry, practice, NFPs, government and education — a complete cross-section of the CPA world.
The Financial Accounting Foundation has released its report of the Blue Ribbon Panel. The report concludes that changes are needed, with a 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.”
I call it distinct but linked — a separate board representing private companies under the FAF working closely with FASB and recommending “exceptions and modifications” that take into account the needs of private company stakeholders.
This is a once-in-a generation opportunity to change the standard-setting process, and I encourage 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.
The MACPA has formed a special Accounting Standards Task Force to study and understand these developments and make recommendations. More about that in future posts.
Change is on the horizon. Stay tuned!
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