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What's Happening with Private Company Standards - Blue Ribbon Panel - Billy Atkinson - Thursday - Regionals 2011
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What's Happening with Private Company Standards - Blue Ribbon Panel - Billy Atkinson - Thursday - Regionals 2011

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Transcript

  • 1. The Blue Ribbon Panel – Conclusions & Heart Burn
    Billy M. Atkinson, CPA
    Past NASBA Chair and Blue Ribbon Panel Member
    NASBA Regional Meetings – June 2011
  • 2. The Blue Ribbon Panel
    Mission of the Blue Ribbon Panel
    • Addressing how GAAP accounting standards can best meet the needs of users of U.S. private company financial statements.
    • 3. Panel was charged with providing recommendations on the future of standard setting for private companies to the FAF Board of Trustees.
    2
  • 4. The Blue Ribbon Panel
    Objectiveof the Blue Ribbon Panel
    Understand:
    Current Standard Setting Structure and Process
    Needs of Users of Private Company Financial Statements
    Cost/Benefit Considerations of GAAP for Preparers
    3
  • 5. 4
    The Blue Ribbon Panel
    U.S. Standard Setter – Public & Private Companies
    NASBA (States)
    Securities and Exchange Commission
    SEC (*)
    Financial Accounting Foundation
    FAF
    AICPA
    Financial Accounting Standards Board
    FASB
    (5-7 Members)
    Various Other FASB Constituent Committees
    (FASAC, etc.)
    Private Company Financial Reporting Committee
    PCFRC
    (*) In addition to the accounting and reporting rules set by the FASB for all U.S. companies, U.S. public companies must also adhere to the regulations established directly by the SEC.
  • 6. The Blue Ribbon Panel
    Landscape of Private Company Reporting “Main Street”
    5
  • 7. The Blue Ribbon Panel
    Panel Make-Up?
    Lenders
    Venture Capitalists / Private Equity
    Business Owners
    Bonding/Credit Agencies
    6
  • 8. The Blue Ribbon Panel
    BRP Majority Conclusions (Final Report)
    Urgent Growing Systemic Issues in current U.S. GAAP standard setting
    Relevance & Complexity Issues concerning many standards for Private Entities
    Unnecessary costs are being incurred for GAAP financial statement preparation and analysis
    Need a process of standard setting to significantly increase the chances of having differences (where warranted) in financial statement management, recognition, presentation and disclosure
    7
  • 9. The Blue Ribbon Panel
    BRP Majority Conclusions (Final Report), continued
    • Establish Exceptions & Modifications to U.S. GAAP for
    Private Entities
    • Establish a New Board (under FAF) to ensure this is
    accomplished for both new and existing Accounting
    Standards
    • New Board should have a “Sunset” Review in about
    3 - 5 years to evaluate effectiveness and process
    • Create a Differential Framework (set of decision criteria) to facilitate and guide the new Board
    • 10. Recommended Transitional Actions by FAF and FASB
    8
  • 11. BRP Report – Minority Viewpoints
    The Blue Ribbon Panel
    • Changes are needed in U.S. Accounting Standard
    Setting
    • Complex & Irrelevant standards must be reined in for both Public & Private entities
    • 12. U.S. cannot have parallel standard setters
    • 13. Underlying economics of transactions and not capital structure should govern standards
    • 14. No Strong Outcry for change from Users
    • 15. Complexity of IFRS decision and considerations
    Slide 9
  • 16. BRP Report – Minority Viewpoints
    Negative consequences of differential standards would
    far outweigh benefits to stakeholders:
    Absence of comparability among entities within industries and in moving to/from public ownership
    Incremental costs of dual accounting standards-setting bodies and processes
    Added strain and costs to users, practitioners, preparers, educators, students and regulators
    Bifurcation of the accounting talent pool in all sectors
    Slide 10
    The Blue Ribbon Panel
  • 17. BRP Report – Transitional Considerations
    The Blue Ribbon Panel
    • FASB should work better with PCFRC
    • 18. FASB should hold separate robust private entity roundtables
    and explain reasoning more transparently
    • FASB should use delayed implementation more liberally
    • 19. FASB should simplify the public comment process to
    encourage more private entity participation
    • FAF should reassess its trustee makeup as well as that of FASB
    • 20. FASAC should be more representative
    Slide 11
  • 21. The Blue Ribbon Panel
    BRP Report – Unanswered Issues
    • Structure of a new Board ?
    • 22. Funding…efficiencies?
    • 23. Independenceof the New Board?
    • 24. How would 2 Boards operate?. . and under one set of
    standards?
    • How can divergenceof Accounting Standards be
    avoided with 2 FASBs?
    • Short & Long Term Actions needed?
    • 25. Is this really the smart thing to do vs. the Emotion
    associated with the issues?
    • Does the Emotion justifythe risks of unintended
    consequences?
    12
  • 26. Considerations of theUltimateAnswer
    The Blue Ribbon Panel
    • FAF must demonstrate its Objectivity & Public Interest
    • 27. Confidence in existing FASB and process of change by
    FAF
    • Can or will FASB change its culture?
    • 28. Can or will FASB have more balanced focus on private
    entity accounting standards?
    • What is the SEC’s viewpoint on Private Entity GAAP?
    • 29. Do the needs of Users dictate the risks exposure?
    • 30. How does this issue impact the IFRS dynamic?
  • Questions?
    Slide 14
    The Blue Ribbon Panel