The AICPA, through the Blue-Ribbon Panel, tried to get the Financial Accounting Foundation (FAF) to create a separate board to create private company standards, but was refused. Rather than a separate board, the FAF created the Private Company Council (PCC). The chair of the PCC is Billy Atkinson, a former Big Four partner who opposed differential standards.
The FAF designed the PCC with a FASB liaison (a FASB board member) to facilitate discussion between the FASB and the PCC. The PCC can only recommend exceptions to FASB standards which must be “endorsed” by FASB in order to become effective.
Mr. Atkinson recently spoke to the AICPA Council saying, “if we do have fixes, we should first evaluate the fixes from the standpoint of all the users, not just the private company users.” He went on to say, “I’m not going to be a rebel or a deviant to that approach,” meaning FASB’s approach to standard setting.
This is not a good sign.
I thought the whole purpose of the PCC is to find exceptions to GAAP, those that accommodate private companies. If it does not do this, then is the PCC necessary?
Robert R. Harris, a former AICPA chairman stated, “this Council overwhelmingly endorsed this concept of differentiation…ten thousand of our members contacted FAF. You say you want input. We give input. And honestly I would tell you I would bet that all 10,000 members feel that we were not listened to by FAF.”
The PCC has not even met yet, and the chairman is speaking about a holistic approach – meaning making changes that affect all companies, both public and private – rather than creating exceptions for private companies. This sounds like more of the same FAF/FASB mindset.
I’m thankful that the AICPA is working on its Financial Reporting Framework for Small and Medium Sized Entities. This framework will provide private-company accounting relief; this framework should be available by mid-year 2013.