State Board Report

August 2010

We want to avoid differential standards, NASBA Chair Billy Atkinson told the Blue Ribbon Panel (BRP) on Standard Setting for Private Companies at their third meeting on July 19, 2010, held in Chicago. Having discussed with the NASBA Ethics and Strategic Professional Issues Committee, Regulatory Response Committee and other concerned State Board members the materials distributed by the BRP, Chair Atkinson said the Boards’ representatives support the Financial Accounting Standards Board, but, “Based upon output trends, we see little evidence of consistent private entity, or ‘main street’ input or consideration in accounting standard development. The Private Company Financial Reporting Committee’s work streams and recommendations have apparently had little influence in standard development or FASB agenda setting.”

At the meeting’s start, Chair Rick Anderson recast his previous statements on the part users of financial information should play in this debate: “A comment I made early on was that this whole process, of evaluating whether or not there should be a different process, needs to be user‐driven. As we listened in the first two meetings, the users were not in love with the standards in use today. They adjusted to what they were given, and they said they could adjust to future changes. Users are open to different standards as long as they make sense and there are legitimate reasons for change. Maybe what I should have said was that any process for change has to be fully acceptable to the users….It is not the users who are asking for change – because the cost is being borne by the preparers and the profession.”

NASBA Chair Atkinson stated: “The FASB should be structured with greater private entity representation. This could take the form of additional FASB board members and/or programmed expectations by the Financial Accounting Foundation (FAF) on behalf of the public and all constituents. There may be various ways to get this done effectively, but we believe the appropriate manner in accomplishing this is within the original commissioning of the FAF.”

AICPA and several other BRP members have voiced support for a separate FASB‐type entity to promulgate differential accounting standards specifically for private entities. The BRP staff has been charged with fleshing out two or three possible models for change, as well as adding focus to its background statement on the need for change, and constructing a survey document to gain public input that has now been posted on http://www.fasb.org/home. Responses will be posted on the Web site. The next meeting of the BRP is scheduled for October 8, 2010 in New York City.

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