On October 4, 2011, The Financial Accounting Foundation (FAF) released its proposal in response to the recommendations of the Blue Ribbon Panel on setting standards for privately held companies. Despite receiving more than 3,000 letters from private companies and various state CPA societies supporting the creation of a separate standard-setting board to modify GAAP for private companies, The FAF instead recommended establishing a council whose decisions are subject to ratification by The Financial Accounting Standards Board (FASB).

 
Many within the business community have expressed disappointment with The FAF'S proposal, including the AICPA. The creation of an independent standard-setting board that would not be subject to The FASB was the cornerstone of the Blue Ribbon Panel's (BRP) recommendations. The BRP recommended the independent board because they feel the FASB has historically been too heavily focused on public companies. The BRP believes exceptions to GAAP and modifications in recognition, measurement, and presentation geared towards privately held companies have been rare and very difficult to achieve.  

 
The AICPA has stated that the concerns of smaller privately held companies cannot be fully addressed until there is an independent board dedicated exclusively to the needs of these companies. The AICPA will continue to urge The FAF to propose an independent standard-setting body.

For more information please contact your Engagement Principal or e-mail Scott Derco at sderco@smf-cpa.com.