Y4K? – or - Why do over 4,000 people
care about the proposal issued in October of this year by FASB
’s parent organization, the Financial Accounting Foundation (FAF
), on how to improve the accounting rule-making (aka, standard-setting) process for private companies?
The high level of engagement on the FAF’s proposal, entitled the Plan to Establish the Private Company Standards Improvement Council (PCSIC)
- which proposes to form a new advisory council focused on making recommendations for exceptions and simplifications to existing and new FASB standards , to better suit the needs of users of private company financial reporting, and submitting such recommendations for public comment and ultimate approval (“ratification”) by the FASB, similar to FASB’s working relationship with the Emerging Issues Task Force (EITF
) - may be attributable to the view that, as expressed in a form letter filed by over 4,200
of the 4,300+ commenters so far:
The new Private Company Standards Improvement Council, as proposed, does not solve the systemic problems that exist with standard setting for private companies because it requires the Financial Accounting Standards Board to ratify any suggested modifications. I urge you to establish a new independent standard-setting body whose decisions would not be subject to the FASB approval process. It is the best way to make meaningful financial reporting changes for private companies a reality.
The above form letter is provided, along with related outreach materials, on the AICPA's website, in its Private Company Financial Reporting Section.
Besides the 4,200+ form letters filed, close to 100 non-form letters have currently been filed on the FAF proposal, with a range of views included in those letters. The comment deadline is Jan. 14, 2012.
FASB has announced it will hold a webcast on Dec. 20 to provide more info on the FAF plan as well as current FASB developments relating to private co's specifically and other general developments at FASB (including convergence) that can impact private co's.
Read more about the FAF's proposal. the reaction to it so far, and the upcoming FASB webcast here.