On December 10, the Blue Ribbon Panel on Private Company Financial Reporting met to work on its recommendations for private company financial reporting in the U.S. The panel is expected to develop a recommendation for a new standard setting model for private company reporting based on U.S. Generally Accepted Accounting Principles (U.S. GAAP) with exceptions and modifications for private companies.
A majority of panel members support this model and also believe that the standards should be set not by the Financial Accounting Standards Board (FASB), but by a separate board under the Financial Accounting Foundation (FAF). The FAF is the oversight body of the FASB and the U.S. Governmental Accounting Standards Board (GASB), and their advisory councils.
The Blue Ribbon Panel was established by the American Institute of Certified Public Accountants (AICPA), FAF and the National Association of State Boards of Accountancy (NASBA) in 2009. The panel’s mission has been to examine standard setting for private companies and issue a report to the FAF. The report is expected to be finalized in December and issued to the FAF in January 2011. At its meeting in February 2011, the FAF will discuss the panel’s report. Afterward, it is likely that the FAF would expose for public comment any changes it might be considering for private company standard setting.
The events that will unfold in 2011 are significant. The SEC is expected to make a decision on IFRS for public companies, FASB and the International Accounting Standards Board (IASB) are expected to complete major accounting convergence projects and the FAF may introduce a proposal for a new reporting model for private entities.
What is your opinion about the possibility of differences in U.S. GAAP for private entities? If the SEC decides to require or allow IFRS for public companies, do you think IFRS or IFRS for Small and Medium-sized Entities (“IFRS for SMEs”) will gain traction with private companies in the U.S.? Let us know what you think.