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| September 2004 | The
Monthly Newspaper of the NYSSCPA |
Vol.
7, No.12 |
AICPA Survey to Gauge Opinions on GAAP
NYSSCPA Participation Needed
By
Mark Ellis
Late
last year the American Institute of CPAs (AICPA) launched a task force
to examine private company financial reporting.
The purpose of the Private Company Financial Reporting Task Force is
to look at how well financial reporting under generally accepted accounting
principles (GAAP) meets the needs of the users of private company financial
statements.
The argument by some is that recent GAAP is focused on curbing abuses and creating rules to govern the more sophisticated business practices of large public companies. Complying with these rules makes the financial statements of privately held companies more expensive to prepare. At the same time, the complicated disclosures and accounting rules do not add anything to the value of the statements to users.
Many private companies have GAAP financial statements prepared simply to fulfill their obligation to a lender or government agency. This user may not need all the information or complex accounting that GAAP requires. This begs the question: “Is there an acceptable alternative that can satisfy this need?”
The counterargument to a different solution is that GAAP financial statements ensure consistency between periods and entities. It is also argued that having different rules or statements would add to the burdens of CPAs, not lessen them.
The task force debated these and other issues, but ultimately reached the conclusion that it will not truly know if private companies have concerns with current GAAP unless it gets feedback from a broad cross section of users. These include business owners such as banks, sureties, government agencies, venture capitalists, creditors and attorneys; preparers such as CFOs and controllers; and CPAs who serve private companies.
As a result, the task force has designed and posted a short web-based survey to gauge opinion on this matter. The survey is located at www.survey.themsrgroup.com/aicpa.html. A discussion paper on the issues can be found at www.aicpa.org/members/div/acctstd/pvtco_fincl_reprt/index.htm.
The AICPA encourages you to take the survey today to register your views. The Institute further asks that you e-mail the link to anyone you know who is a user of private company financial statements. The survey is the largest of its kind undertaken on this issue and is critical to determining whether private companies need a different GAAP solution.
Mark Ellis, ACA, CPA, is the CFO of Michael C. Fina, and a member of the NYSSCPA board of directors, the FASB small business advisory committee, and the AICPA task force on private company financial reporting. He can be reached at mellis@mcfina.com.
