FASB And AICPA Seek To Improve Financial Reporting For Private Companies

by Glen Shapiro, LawAndTax-News.com, New York

13 June 2006

The Financial Accounting Standards Board and the American Institute of Certified Public Accountants last Thursday issued a joint proposal intended to improve the financial reporting process for private company constituents.

Specifically, the joint initiative seeks constituent feedback on proposed enhancements to the FASB’s standard-setting procedures that would determine whether the Board should consider differences in accounting standards for private companies within Generally Accepted Accounting Principles.

Under the proposal, the FASB would implement certain improvements to enhance the transparency of its standards-setting process for private companies and consider input from private company constituents. To that end, the FASB and the AICPA would also sponsor and fund a joint committee to serve as an additional resource to the FASB, to further ensure that the views of private company constituents are incorporated into the standard-setting process.

The comment period for the proposal ends on August 15, 2006.

The FASB and the AICPA are encouraging everyone who plays a role in private company financial reporting – bank lenders, sureties/bonding companies, investors, owners and preparers, and practitioners – to review the proposal and comment on it.

“The importance of non-issuers to our capital market system cannot be overstated,” explained Barry C. Melancon, AICPA President and CEO, continuing:

“While only about 17,000 companies are registered with the SEC, there are over 20 million that are privately held. Private companies play a critical role in job creation and entrepreneurialism.”

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