The jostling about accounting standards for private companies continued last month as the Financial Accounting Foundation (FAF), the overseer of U.S. accounting standards-setters, proposed setting up a group to make recommendations on how to modify U.S. generally accepted accounting standards for private companies. Those recommendations would require approval from the Financial Accounting Standards Board (FASB).
The FAF proposal runs counter to the recommendations of the Blue Ribbon Panel on Standard-Setting for Private Companies, which earlier this year recommended establishing an autonomous board to set accounting standards for private companies, rather than having FASB oversee them.
The American Institute of CPAs, which supports separate standards for private companies, says that if FAF’s proposal is adopted, it will consider other ways to assist private companies. For example, the AICPA says it might create a separate standard-setting group to develop a GAAP for private companies.
GAAP’s suitability for private companies has been debated for years. In 2009, the International Accounting Standards Board set up a separate set of international accounting standards for private companies, called IFRS for SMEs.
For a previous look at whether private companies need their own accounting standards, see Rightsizing Accounting.