The American Institute of Certified Public Accountants and the Financial Accounting Standards Board expect to issue a joint proposal to create a “resource” that will focus on how generally accepted accounting principles might differ at private companies.
“We are trying to come up with some mechanism to make sure FASB can hear about and understand what will result in the most useful information for private-company constituents,” said Dan Noll, the AICPA’s director of accounting standards. Those parties include bank lenders, corporate financial management, company owners, and certified public accountants, he added.
The AICPA and FASB haven’t determined the structure of this resource, but “it is meant to be long-term,” said Noll. “As long as there will be GAAP standard-setting activities, this setup will need to exist.”
At first, according to Noll, the resource would interact with private-company constituents and share their concerns with FASB. Later, he added, it will also view future FASB-proposed GAAP requirements or standards from a private-company perspective.
The AICPA-FASB proposal is currently in draft form and should be available for public comment this spring.
Another development also suggests greater attention to the effects of GAAP on smaller businesses. FASB has created two new positions that will focus on private, small companies, according to board member Edward Trott, speaking last week at a conference sponsored by the Foundation of Accounting Education for the New York State Society of Certified Public Accountants. The goal, said Trott, is to help the board and staff understand the different needs and additional costs that private companies experience in implementing standards.
The two positions — one permanent, the other a fellowship — are open to all applicants. Professionals from private companies have served as FASB fellows in the past, but none have had a dedicated focus on small companies during their tenure, FASB senior technical advisor Russell Golden told CFO.com. “Most of our board comes from a large-company background,” Trott added, “and this is another way we can get fresh insights.”