Task Force Looks Into GAAP

Task Force Looks Into GAAP
AICPA Group Explores Financial Reporting for Private Companies

By Simon Eskow

Continued from the Home Page

The AICPA’s Private Company Financial Reporting Task Force has been looking into “whether there are issues with private company financial reporting,” according to a statement released by the Institute in March.

Among other issues, the task force is addressing concerns over “the relevance of the current body of GAAP literature to smaller, private companies,” according to the statement.

“We’re exploring whether there is a need for a separate body of accounting standards,” AICPA spokesman Joel Allegretti said. “Basically it’s in an exploratory mode: Is it even necessary to have a separate standard for private companies?”

The AICPA has garnered the participation of groups concerned with private company financial statements, such as the American Bankers Association and the National Federation of Independent Business, as well as state CPA societies, a move that one CPA task force member praised.

“We want to come out of this with a valuable piece of research that may change how financial reporting is done for small and medium-sized businesses,” New York State Society of CPAs Director Mark Ellis said. “I really think the task force is trying to put something together that will confirm whether we have an issue and what solution might be out there. The input of a large group of the various stakeholders in this process is key to our success.”

Ellis, who also serves on a Financial Accounting Standards Board (FASB) advisory committee on small companies, said he is pleased with the AICPA’s effort to seek wide participation in the task force’s work.

“The task force has reached out to the NYSSCPA and the other state societies as a resource to help gather the views of members from around the country both in industry and public practice,” Ellis said. “As a task force member, I am delighted to see the AICPA mounting such a large national initiative that is based on working closely with the states and other stakeholder groups.”

The AICPA Director of Accounting Standards Dan Noll said the task force arose in response to concerns the Institute had heard among some members during the Institute’s council meeting last October.

Noll said the task force currently is putting together a questionnaire targeted to participating groups.

“We’re trying to ask a fundamental question: How is GAAP working for you?” Noll said. The task force will issue the questionnaire this spring. The questionnaire will serve as “the mechanism to get the views of all the constituents,” Noll said.

The task force should complete its work by the end of July, when it will report back to the AICPA Board of Directors, Noll said. Other action that may come out of the group is still in development, such as any comments the task force may wish to submit to FASB regarding GAAP. Noll also added that the task force’s work is seen as broader than the underlying basis for FASB’s advisory committee.