The Journal of Accountancy published an interesting article today called Blue-Ribbon Panel Narrows Field for Private Company Financial Reporting. As you may be aware, there has been discussion in this area for a long time.
I read this with interest and had the following thoughts:
- At the heart of the matter, this deals with big company versus little company GAAP. While our Firm does a lot of SEC audits, we do private company audits, reviews and compilations. Every year it is harder and harder for the private sector to comply.
- The SEC keeps pushing towards some kind of convergence with IFRS, but this panel eliminated any IFRS models. That they also eliminated the "status quo" isn't surprising.
- The panel is leaning to a different model of GAAP.
If implemented, my take is that we would wind up with public company GAAP and private company GAAP. I have long expected that to happen, but fundamentally it just doesn't seem right. Long run it likely means higher costs as well, and nobody wins in that scenario.