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United States 'Blue-Ribbon Panel' issues report on private company reporting

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26 Jan 2011

The 'Blue-Ribbon Panel' addressing how U.S. accounting standards can best meet the needs of users of private company financial statements has issued a report of its recommendations to the Financial Accounting Foundation (FAF) Board of Trustees.

The report calls for fundamental changes to the system of standard setting, including the creation of a new board, to be overseen by the FAF, that would focus on making exceptions and modifications to U.S. GAAP for private companies that better respond to the needs of the private company sector. The report also recommends the creation of a differential framework (a set of decision criteria) to facilitate a standard setter's ability to make appropriate, justifiable exceptions and modifications. The report does not advocate a move toward a separate, self-contained GAAP for private companies or a comprehensive reorganisation of GAAP.

The report confirms the Panel's view that mandating the use of the IFRS for SMEs in the United States is not appropriate at the current time. However, because the AICPA now recognises the IASB as an authoritative standard setter, in many instances private companies (other than financial institutions) may also report under IFRS or IFRS for SMEs. An extract follows:

U.S. private companies should not be leading the charge, en masse, to an IFRS-based set of standards before the SEC makes a decision on U.S. public companies, especially given the extent of change management efforts that private company stakeholders might have to undertake.

Click for FAF press release (link to FAF website)

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