State Board Report

July 2011

While many have conceded that private company issues have festered in the background of the Financial Accounting Standards Board’s policymaking, how this should be changed was debated at NASBA’s Regional Meetings. Billy Atkinson (TX), NASBA Past Chair and a member of the FAF/AICPA/NASBA Blue Ribbon Panel on Private Company Standard Setting, told the meetings’ participants, “As regulators, we have a legal responsibility to look at the process the Financial Accounting Foundation is going through and respond to their recommendation when they ask for response. Then we should comment as State Boards. Each State Board should look at this issue and then weigh in.” FAF Chairman John J. Brennan’s appointment of a working group to study the private company standard issue was commended by Mr. Atkinson, “Jack Brennan is doing it right — and that is why we need to support the existing process.”

AICPA members have been encouraged to take more immediate action by AICPA President Barry Melancon, when at the Institute’s Spring Council Meeting he urged them to write letters to the FAF calling for differential standards and a separate standard-setting body for private companies. In keeping with Mr. Melancon’s message, at NASBA’s Western Regional Meeting AICPA Vice President Charles Landes stated: “The Blue Ribbon Panel agreed there is a problem: The debate is how do you effectively and efficiently fix that problem. I am more passionate about this than Barry Melancon because of my 35 years of experience in dealing with private companies.” He said: “I believe it is time for a different approach. Ask the FAF to assign another board. It is critical to think about the past efforts: How do we not repeat past failures, and how do we move forward? Express your views — whatever they might be.”

Mr. Atkinson stated that before another standard setting board is established, “It has to be for a good reason – and we don’t think we are there yet.” He commented, “The IFRS are the gorilla on the horizon: We don’t want to go down the road when other standards (SME) are more compatible with IFRS.” As the former leader of his firm’s private company section, having audited small companies for 39 years, Mr. Atkinson said, “We agree there is a problem. There needs to be consideration of users’ needs in the promulgation of standards.” He also underscored, “There needs to be consistency on how private and public companies account for the same transaction.”

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