By Anne Rosivach
In a statement issued in advance of the October 8 meeting of the Blue Ribbon Panel on private company standards setting, panel member Barry Melancon said he expected the panel to vote to recommend a new model of financial reporting that will generate “truly differentiated standards for private companies.”
Melancon, who is president and CEO of the American Institute of Certified Public Accountants (AICPA), added that establishing a separate standard setting board under the Financial Accounting Foundation (FAF) “would be crucial to the effective implementation of that recommendation.”
The Blue Ribbon Panel, sponsored by FAF, the AICPA, and the National Association of State Boards of Accountancy (NASBA), decided at their July meeting to recommend some form of change to FAF. This week, they will choose one of the proposed standard setting models for separate private company accounting standards and the structure that will set the standards.
“The Blue Ribbon Panel is likely to select a model that could fall between baseline GAAP with public company add-ons, and separate, stand-alone GAAP based on current U.S. GAAP. But whatever model is chosen will have a separate board," Melancon told AccountingWEB.
“FASB will still drive the train. It would set standards. The new board would review the standards and would have the power to decide whether or not they were appropriate for private companies, or whether they should be modified for private companies. The board would also be empowered to make modification to existing standards," he said.
“We do not want differences for difference sake. This board would function as a filter. This is a practical solution that would allow us to respond relatively quickly to the growing demand for changes for private companies in areas where there is a lot of disconnect,” Melancon said.
AICPA Chairman Robert R. Harris emphasized the importance of a separate board.
“This is the meeting where it all comes together – the standards and the standard-setting process are the essence of what the panel’s been working toward,” Harris said in an interview. "The AICPA believes, regardless of the reporting model to be recommended, that a separate standard setting board is necessary for private company reporting to become a reality."
Chaired by Rick Anderson, chairman and CEO of Moss Adams LLP and a member of the board of the FAF, the Blue Ribbon Panel has met three times in 2010, and expects to complete its recommendations on changes in standard setting and standards for the 29 million private companies in the U.S. by December. The recommendations will be presented at the first meeting of the FAF in the New Year.