State Board Report

November 2010

The AICPA/FAF/NASBA Blue Ribbon Panel (BRP) on Standard Setting for Private Companies has determined that there is a problem in U.S. GAAP being relevant and overly complex for private companies, and the Panelists have whittled down to two their possible recommended solutions to this situation. Both solutions would have standards more carefully considered from the private company perspective, but one would also create a separate standard?setting board, apart from FASB, for this purpose and the other would continue with the FASB having a permanent work stream from the private company sector, NASBA Chair Billy Atkinson told NASBA’s 103rd Annual Meeting, held October 24?27 in San Antonio, TX.

“The private entity financial statement users tell us they dissect the information they get from financial statements down to cash flow measures. They are looking at cash flow and the ability to repay investments or loans. Users have evolved such measures over time and in a quiet way. Now the preparers and practitioners are looking at the consequences of having another standard?setting body,” Chair Atkinson told representatives from 51 Accountancy Boards. He said, NASBA, on behalf of the State Boards, has held consistently to the approach that a change at the FASB is needed in this regard, rather than creating a separate FASB?type board for private entity accounting standards’ promulgation. “We have confidence in the Financial Accounting Foundation’s ability to get GAAP more private?entity centric”.

The BRP’s final report will be discussed at its December 10, 2010 meeting in Norwalk, Conn. and Mr. Atkinson expects it could contain both a majority and a minority view. Chair Atkinson encouraged the Boards to comment to FAF on that BRP report once the final version is issued.

Chair Atkinson summarized several of NASBA’s achievements during the past year:

? The tri?party CPA Examination agreement with the AICPA and Prometric has been signed and now extends through 2024, and a two?year agreement has been signed for the pilot testing of international examination delivery;

? Mobility legislation has been enacted in 47 states with three in process;

? Committees developed papers on: a uniform ethics independence rule; a rationale and legislative template for a semi?independent State Board of Accountancy; and threats and safeguard considerations in audit engagement profitability;

? NASBA held its third international forum for accountancy regulators, this year in Madrid;

? NASBA participated in its first annual Canadian Institute of Chartered Accountants (CICA) summit meeting in Toronto;

? A review of the standards for continuing professional education was initiated;

? Numerous response letters were sent out from NASBA relative to exposure drafts with regulatory impact;

? The Examination Review Board was reorganized into a five?person board with enhanced and dedicated professional staff;

? The Selection Advisory Committee was created as a 10?person advisory group to the Executive Committee; ? Thirty?one states are now full participants in the Accountancy Licensee Database;

? Peer review programs were implemented in several states including the critical element of State Board oversight;

? An on–line enforcement manual was created to assist the State Boards; and

? The Center for the Public Trust established its first student center.

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