FASB Launches Small Business Committee

FASB Launches Small Business Committee
Two Society Members Selected for Advisory Group

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NEW YORK—The Financial Accounting Standards Board in March launched a formal committee to help develop accounting rules geared toward small business.

The standard-setting organization selected two New York State Society of CPAs members, Robert Dyson and Mark Ellis, to serve on the 24-person Small Business Advisory Committee.

“I commend the FASB for embracing the idea of hearing not just from the large but also small businesses,” Ellis said.

The committee will serve as a “resource to provide guidance on relevant and topical issues and the impact of accounting standard-setting on small business constituents,” a letter addressed to the two members stated. The committee will include investors and analysts, controllers, chief financial officers and auditors from various kinds of small businesses. The committee’s first meeting is scheduled for May 11.

“The FASB has always recognized small businesses as an important constituency,” FASB Chairman Robert H. Herz said in a press release. “Formation of the (committee) should be a win-win for everyone involved, and the board looks forward to working with the group.”

George Batavick, a FASB member and liaison to the nascent committee, said that while the board has always sought the input of small businesses, the time was ripe to establish a formal advisory group.

“I think we noticed late last year with the passage of the Sarbanes-Oxley Act, and with a number of new projects, we really thought it was an excellent time to establish a formal committee as part of our due diligence,” Batavick said.

Current FASB projects, Batavick said, include business combinations, fair value measurement and revenue recognition. The board will decide where the committee will focus its attention, and it invited the new committee members to list topics they would like to broach.

“I’ve been knocking that around,” Dyson said. “I have problems with accounting guidelines for derivatives. That’s 800 plus pages (of guidelines); that has to be looked at.”

Ellis also mentioned fair value measurement as an important topic.

“I hear a lot of talk about fair value accounting. As the CFO of a medium sized privately held business, I do not see how fair value will add to the information my management group or our bank needs that is not already provided in the notes to our statements,” Ellis said.

“I can see how I might find this very insightful as a shareholder of General Motors but I worry about its application to our business. This and other issues have a very large effect on millions of small businesses and I am excited about being able to hear the FASB’s ideas and to give the views of small business,” he added.

Batavick said the FASB selected members from what the board generally identified as “user” groups—lenders, investors, analysts and preparers of statements, including representatives from a number of auditing firms—that FASB has consulted with from time to time for past accounting issues in advisory councils.

Ellis, the CFO for Michael C. Fina, is a member of the NYSSCPA Board of Directors.

Dyson, the director of quality control at Friedman Alpren & Green LLP, reviews financial statements for clients to ensure compliance with professional standards. Dyson also is the chairman of the NYSSCPA Financial Accounting Standards Committee.

“I think we got together a good balance of the business world and we have an excellent group here,” Batavick said.