Blue Ribbon Panel On Private Cos. Prefers New Standard Setting Model And Separate Board
Oct. 11, 2010
On Fri., Oct. 8, 2010, the Blue Ribbon Panel on Standard Setting for Private Companies indicated a preference for a new standard-setting model for private company generally accepted accounting principles, with a separate private company standards board. The new board, like the Financial Accounting Standards Board and the Governmental Accounting Standards Board, would be under the oversight of the Financial Accounting Foundation. As FEI previously reported, in the days leading up to the blue ribbon panel meeting, the AICPA noted its preference for a separate standards board, which would operate under the Financial Accounting Foundation. A detailed summary of the Oct. 8 meeting, prepared by FEI staff who observed the meeting, follows.
Blue Ribbon Panel Favors New Standard-Setting Model, New Board For Private Companies
The expression of a preference for a new standard setting model and a new board focused on private company standards took place at the blue ribbon panel's fourth meeting, which was held in New York City.
Members of the panel discussed responses received from constituents to its questionnaire published earlier this year. Additionally, panel members discussed accounting models and standard-setting structures for private companies. Each of the members and official observers expressed their opinions about the models and structures.
The five models discussed, narrowed down from an earlier meeting, included:
· Model 2A – GAAP with exceptions for private companies ( enhanced) with Restructured FASB Board;
· Model 2B – GAAP with exceptions for private companies ( enhanced) with separate private company standards board (NOTE: this was the model, which most – but not all - blue ribbon panel members preferred, is discussed further below);
· Model 3A – Baseline GAAP with Add-Ons for public companies with Restructured FASB Board;
· Model 4A- Separate, Standalone GAAP for private companies with Restructured FASB Board; and
· Model 4B- Separate, Standalone GAAP for Private companies with separate private company standards board.
Most of the blue ribbon panel members preferred model 2B, but some members had a different view. The panel will continue discussing this issue at its next meeting on Dec. 10 at the FAF offices in Norwalk, Conn. The panel is expected to issue a report to the FAF Board of Trustees in January 2011 and then to the public.
To see the News Release issued by the Financial Accounting Foundation following the October 8 meeting, click here.
FEI Committee on Private Company Standards Contributes Thought Pieces
During the meeting, blue ribbon panel member Daryl Buck explained the letter “Responses to Arguments Against Separate Private Company Accounting Standards” that FEI’s Committee on Private Company Standards (CPC-S) sent to every member and observer of the panel. (Note: Blue ribbon panel members serve in their personal capacity; a number of FEI members are members. Buck also serves as chairman of FEI’s CPC-S.)
The CPC-S letter argued against the option of one GAAP for all companies and suggested separate standards for private companies. Buck also elaborated on the organization and mission of FEI to the panel and other attendees at the meeting.
FEI staff members Lorraine Malonza and Ronald Wei observed the meeting and wrote this summary. For information about FEI’s CPC-S, including if you currently work for a private company and are a current member of FEI or meet FEI’s membership criteria for a full member (Executive member), or our new Associate member category, and would like to discuss potential participation on FEI CPC-S, please contact Ronald at firstname.lastname@example.org.
Prepared Oct. 11, 2010, by Lorraine Malonza, senior manager, Accounting Policy and Financial Research, and Ronald Wei, manager, Finance and Accounting Research, Financial Executives International. This summary does not represent FEI opinion unless specifically noted above.