Standard Setting for Nonpublic Entities—A Mid-Year Update on the FAF’s Strategic Review Activities
Norwalk, CT, July 7, 2011
—The Financial Accounting Foundation (FAF) has made significant progress in its strategic initiative to evaluate the accounting standards needs of all nonpublic entities, including private companies and not-for-profit organizations. The Trustee Working Group, established by the FAF earlier this year, is in the process of conducting outreach to stakeholders as part of the Trustees’ consideration of the FASB’s efforts in setting standards for nonpublic entities. The Working Group is evaluating the adequacy and appropriateness of those efforts in the context of the unique challenges faced by nonpublic entities.
To date, the Working Group has conducted a series of meetings with stakeholders, including meetings with representatives of large, mid-market, and small CPA firms, all with significant practices in private companies and not-for-profit organizations. The Working Group also met with leading members of the academic community who have reviewed and, in some cases, undertaken significant research on issues relating to private company and not-for-profit financial reporting. Representatives of the Working Group have also participated in discussions with the FASB’s advisory groups, including the Financial Accounting Standards Advisory Council, the Private Company Financial Reporting Committee, the Not-for-Profit Advisory Committee, and the Small Business Advisory Committee.
Because the Trustees’ evaluation of this topic would not be complete without input from users of financial statements for private companies and not-for-profit organizations, representatives of the Working Group have had meetings and planned additional meetings with lenders, investors, sureties, regulators, donors and others. The Working Group also will meet with preparers of financial statements for private companies and not-for-profit organizations to hear first-hand their concerns about compliance with GAAP and the ability to effectively engage in the standard-setting process. During the course of their review, the Trustees also may consider whether additional academic research is necessary.
The Working Group will continue its efforts throughout the third quarter. It is anticipated that the Trustees will share their findings and conclusions in the fall. We will provide further updates as the process continues.
About the Financial Accounting Foundation
The FAF is responsible for the oversight, administration, and finances of both the Governmental Accounting Standards Board and its counterpart for the private sector, the Financial Accounting Standards Board. The FAF also is responsible for selecting the members of both Boards and their respective Advisory Councils.