State Board Report
In response to the AICPA’s exposure draft “Proposed Financial Reporting Framework for Small – and Medium-Sized Entities,” (FRF-SME) the NASBA Board of Directors at their January 25 meeting resolved that, “The Public Company Council needs a reasonable opportunity to develop standards uniquely applicable to private companies that can be authoritative and part of generally accepted accounting principles (GAAP).” The PCC, which held its initial meeting on December 6, will next meet on February 12.
In a letter to the AICPA, the NASBA Board urged “the AICPA to either table or withdraw the FRF-SME proposal in order to allow the PCC to do its work to improve the process of setting accounting standards for private companies.” January 30, 2013 was the end of the exposure draft’s comment period.
The Board’s resolution was developed after a multi-hour discussion of the AICPA’s proposal. Its letter to the AICPA stated: “The NASBA Board has significant concerns that AICPA’s initiative to develop a non-authoritative financial framework will confuse practitioners, preparers, users and the public at large for many reasons and at many levels.”
Section 209 of the Sarbanes-Oxley Act of 2002 underscores the State Boards’ pivotal role in the development, adoption and enforcement of standards, as the NASBA resolution and letter pointed out. NASBA Chair Gaylen Hansen observed that NASBA had supported the recommendations of the Blue Ribbon Panel that was jointly sponsored by the AICPA, NASBA and Financial Accounting Foundation (see sbr 1/2010). The PCC was formed in response to those recommendations. “We agreed with the AICPA that there are problems, but the PCC is moving forward consistent with the direction chosen by the FAF,” Mr. Hansen said. “The question is whether or not the FRF-SME is in the public interest.”
- MEMBER CENTER