How Many Accounting Frameworks Are Enough?

A Critical Look at Standards for Private Companies

Nicholas J. Mastracchio, PhD, CPA, and Heather M. Lively, MAcc, CPA

For more than 40 years, the CPA profession has debated the idea of having a separate set of accounting standards for some undefined segment of closely held businesses—a brief history of the debate can be found in the May 2006 issue of The CPA Journal (Jeffrey S. Zanzig and Dale L. Flesher, “GAAP Requirements for Nonpublic Companies: New Views on ‘Big GAAP’ Versus ‘Little GAAP’”). More recently, in December 2009, the Financial Accounting Foundation (FAF), the AICPA, and the National Association of State Boards of Accountancy (NASBA) established the Blue Ribbon Panel on Standard Setting for Private Companies in order to address how accounting standards can best meet the needs of users of U.S. private company financial statements; the panel was charged with providing recommendations to the FAF Board of Trustees on the future of private company standards setting.