How Many GAAPs Will We Have in 2012? Blue Ribbon Panel to Finalize Rec's on Pvt Co Std-Setting to FAF Next Week

As the SEC continues its consideration of whether to permit - or require - U.S. public companies to file their financial statements using International Financial Reporting Standards published by the International Accounting Standards Board, vs. the longstanding practice of using U.S. Generally Accepted Accounting Principles published by the Financial Accounting Standards Board, private companies, the users of their financial statements, their auditors, lenders and others, as well as standard-setting bodies, have raised the question of how private company GAAP should look in a potentially post-IFRS world.

IFRS for Small and Medium Sized Enterprises (IFRS for SMEs) was published by the IASB a couple of years ago to as a standalone set of IFRS to better meet the needs of private companies and users of their financial swtatements. (In plain English, I will loosely define 'private companies' as used in IFRS for SMEs as companies that are not listed on public stock exchanges and do not have 'public accountability' such as banks and other financial institutions; refer to the IFRS for SMEs document for the precise definition of entities that fall in the scope ofo SMEs.)

Canada, which is on its way to adopting IFRS (i.e., public companies adopting IFRS as of Jan. 1, 2011; see related FEI Canada Research Foundation report on IFRS readiness published Aug. 2010) decided to issue a separate set of standards for private companies.

In the U.S., the FASB-AICPA Private Company Financial Reporting Advisory Committee - which is meeting this week, recommended to the Financial Accounting Foundation (FAF - overseer of the FASB) that the future of financial reporting for private companies in the U.S., including the related standard-setting model, be considered, particularly in light of the potential move to IFRS for public companies. Here is the agenda for this week's PCFRC meeting, which includes a joint meeting with FASB's Small Business Advisory Committee.

Blue Ribbon Panel on Private Co's ToFinalize Rec's to FAF
As previously reported (see FAF press release, and FEI blog post), at its October, 2010 meeting, the Blue Ribbon Panel indicated a preference for a new standard-setting model for private company generally accepted accounting principles, with a separate private company standards board. The new board, like the Financial Accounting Standards Board and the Governmental Accounting Standards Board, would be under the oversight of the Financial Accounting Foundation.

At next week’s (December 10) Blue Ribbon Panel Meeting (as noted at the conclusion of their October minutes):

“the panel members would be reviewing and discussing a draft report with the panel’s majority recommendation and minority views. [Mr. Anderson, Chair of the
Blue Ribbon Panel and Chairman and CEO of audit firm Moss Adams], Mr. Atkinson
[NASBA Chair], Mr. Melancon [AICPA President and CEO] and Ms. Polley [FAF
President and CEO] agreed that further discussion of the logistics and
operationality of the separate private company board would be needed at the
December meeting before the recommendation(s)/report could be finalized and
issued in January to the FAF trustees.”

The public portion of the Dec. 10 Blue Ribbon Panel meeting will be webcast; here is the agenda; meeting materials will also be posted.

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