The FAF's consideration of whether and how to establish differential accounting standards for public vs. private companies, referred to colloquially as Big GAAP/Little GAAP, has great import for private companies and the users of their financial statements in particular. In addition, the subject is of interest to public companies and the U.S. Securities and Exchange Commission as well, as noted in SEC Chief Accountant Jim Kroeker's June 5 speech at USC.
Over 1,500 comment letters have been filed to date with the FAF, the majority of which back the recommendation made earlier this year by a Blue Ribbon Panel on private company standard-setting, to form a separate board for private company standard-setting. Most of the letters expressing that view use language about the need for systemic change, and other language, said to have been drawn from analysis/talking points suggested by the AICPA. (See all comment letters filed to date.)
Other comment letters, such as the comment letter filed earlier this year by FEI's Committee on Private Company Standards (CPC-S), recommend other actions be taken by the FAF, short of forming a separate board, to address private company standard-setting. For example, FEI CPC-S recommended that FAF form a Private Company Task Force (PCTF), empowered to set standards under the oversight of FASB, similar to the Emerging Issues Task Force (EITF). Such a PCTF would be envisioned as being composed of leading professionals with experience as preparers and users of private company financial reporting.
As previously reported, the FAF expects to reach its conclusions on this matter this fall.
Highlights from some of the comment letters filed, and additional analysis, can be found here.