Friday, March 12, 2010

Blue Ribbon Panel On Private Co Accounting To Hold First Meeting April 12

According to information posted on FASB's website, the Blue Ribbon Panel on Private Company Accounting (abbreviated below as "BRP") will hold its inaugural meeting on April 12.

As we have previously reported, and based on information provided on the Blue Ribbon Panel webpage on FASB's website: "The American Institute of Certified Public Accountants (AICPA), the Financial Accounting Foundation (FAF; the parent organization of the Financial Accounting Standards Board (FASB)), and the National Association of State Boards of Accountancy (NASBA) have established a “blue ribbon panel” (the Panel) to address how accounting standards can best meet the needs of U.S. users of private company financial statements."

Additional information on the April 12 BRP meeting is forthcoming. According to Christine Klimek, Communications Manager at the Financial Accounting Foundation, "We will be announcing the meeting details—including registration information—within the next week. The agenda and other public meeting materials will be posted to the FASB website approximately one week before the meeting." According to Klimek, the meeting will also be webcast.

Matters To Be Addressed Include "Possible Alternatives For Private Co. Standards"
As further noted on the BRP's webpage on the FASB website, "The Panel will comprehensively review the current system of standard setting for private companies in the U.S., including the following matters:
  • Who are the actual users of private company financial statements and how do they use GAAP financial statements in their decision making?
  • What is the key, decision-useful information that the various users need from GAAP financial statements?
  • Are current GAAP financial statements meeting those needs? Why or why not?
  • Are the benefits of GAAP financial statements outweighing the costs of preparing those statements for private companies?
  • How does standard setting for private companies in the U.S. compare to standard setting in other countries, both those that have adopted IFRS for Small and Medium-Size Entities and those that have not?
  • To the extent that current GAAP is not meeting user needs in a cost-beneficial manner, what are some possible alternatives for private company standards (e.g., separate, stand-alone standards; base-level standards for all entities with additional disclosure requirements for public companies) and what are the implications for standard-setter structure and/or processes?

The BRP webpage adds: "In addressing these matters at a strategic level, the Panel will consider relevant studies and other reports on private company financial reporting that have been done over the years by the AICPA, the FAF, and others."

Panel's "Work Plan" Will Include Document(s) To Be Released
Also of note on the BRP's webpage is the discussion of the anticipated end-product of the BRP, a report to be issued to the Financial Accounting Foundation, which in turn is developing an 'action plan.' Here is what the BRP's webpage currently states:

The Panel will conclude its work and issue a report, with any recommendations on the future of standard setting for private companies, to the FAF Board of Trustees (the Trustees) in approximately one year. The Panel’s report will be made available to the public and the Trustees’ resulting action plan is expected to be exposed for public comment prior to that plan being finalized.

I posed a question to the FASB, as to why a commitment was made in the language above as far as the FAF planning to release its draft action plan for public comment, but no mention of plans for the BRP to seek public comment before issuing their final report. I observed that the SEC Advisory Committee on Improvements to Financial Reporting (CIFiR - aka the "Pozen Committee") released its draft recommendations for public comment (in the form of a "Progress Report") prior to CIFiR delivering their final recommendations to the SEC, and the FASB-IASB Financial Crisis Advisory Group (FCAG) sought public comment on some specific questions - although not on FCAG's recommendations per se - prior to issuance of FCAG's final report to FASB and the IASB.

Jeffrey Mechanick, Assistant Director at the FASB who also worked with the FCAG, responded to my questions as follows:

"The FAF will seek public comment on its action plan, as part of its public accountability.

"Since the Blue Ribbon Panel hasn't even met yet, it will talk about its workplan during the administrative part of its first meeting." He added, "I have no doubt the BRP will seek public input."

"By the very way it was constituted," Mechanick continued, "we went through all the key constituent organizations and chose panel members not just because of their accomplishments, but also because of their wider ties. Therefore, I'd expect BRP members to reach out for a wider set of input than just their own thoughts.

"Beyond that, this panel may very well choose to do something to get even broader public input; for example, it could do what FCAG did in soliciting input from the general public, an open call for input. Again, at this point, the panel has not yet met to discuss or decide on this issue."

Mechanick also emphasized the extent to which information about the BRP and its deliberations will be made available to the public. "With the exception of purely administrative actions, similar to FCAG, we are going to try to hold these meetings in the public; in fact, virtually all of the BRP's meetings will be done in the public and webcast. Also, as with FCAG, we will archive the webcasts for those who are unable to listen to them live."

Additionally, he noted, "we have set up webpages providing information about the BRP on the FAF website, with a link from the FASB website, and the AICPA website and NASBA website will also link back to information about the BRP on FAF's website."

Mechanick, who is coordinating staff support of the Blue Ribbon Panel, noted he is looking forward to the first meeting of the group. "This is a very important project for the private company sector and for the three sponsoring organizations, one that I expect will involve some very interesting Panel discussions," he said.

The FASB has also posted a list of BRP members and observers. For additional background, see our earlier posts on the BRP here, here, here and here.

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