Update on FAF blue-ribbon panel
FAF blue-ribbon panel issues report on standard setting for private companies. The Financial Accounting Foundation’s (FAF) "blue-ribbon panel" (the Panel) recently finalized its work and issued its report to the FAF Trustees.
In its report, the Panel concluded that the current system of US accounting standard setting lacked an understanding of the information that users of private company financial statements consider “decision-useful" as well as how the needs of such users differ from those of the users of public company financial statements.
The Panel recommends a model of accounting based on existing US generally accepted accounting principles (US GAAP), but with exceptions and modifications for private companies that better responds to the needs of the users of private company financial statements. The Panel also advocates creating a differential framework – a set of decision criteria – to facilitate a standard setter’s ability to make appropriate and justifiable exceptions and modifications.
Additionally, the Panel recommends the creation of a separate private company standards board under the oversight of the FAF that would work closely with the Financial Accounting Standards Board (FASB), but would have final authority over the exceptions and modifications to US GAAP.
More information regarding this subject can be found on the American Institute of Certified Public Accountants (AICPA) website.
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Timothy Christen of Baker Tilly provides his opinion on the blue-ribbon panel and private company financial reporting in this AICPA video.
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