Blue-Ribbon Panel Overview
In 2010, the American Institute of Certified Public Accountants (AICPA), the Financial Accounting Foundation (FAF; the parent organization of the Financial Accounting Standards Board (FASB)), and the National Association of State Boards of Accountancy (NASBA) have established a “blue- ribbon panel" (the Panel) to address how accounting standards can best meet the needs of U.S. users of private company financial statements.
Panel Structure and Membership
The Panel was chaired by Rick Anderson, Chairman and CEO of Moss Adams, LLP, and former FAF Trustee. Its 18 Panel Members
consisted of senior leaders representing a cross-section of financial reporting constituencies, including lenders, investors, and owners, as well as preparers and auditors. Members were appointed to the Panel based on their extensive experience in their respective fields and their keen and broad interest in financial reporting for private companies.
In addition to the Panel members, the Panel also invited certain regulators and other key stakeholders to serve as Participating Observers
Others will likely be invited to individual meetings to provide their expertise to the Panel on specific matters.
Scope of Review
The Panel comprehensively reviewed the existing system of standard setting for private companies in the U.S., including the following matters:
- Who are the actual users of private company financial statements and how do they use GAAP financial statements in their decision making?
- What is the key, decision-useful information that the various users need from GAAP financial statements?
- Are current GAAP financial statements meeting those needs? Why or why not?
- Are the benefits of GAAP financial statements outweighing the costs of preparing those statements for private companies?
- How does standard setting for private companies in the U.S. compare to standard setting in other countries, both those that have adopted IFRS for Small and Medium-Size Entities and those that have not?
- To the extent that current GAAP is not meeting user needs in a cost-beneficial manner, what are some possible alternatives for private company standards (e.g., separate, stand-alone standards; base-level standards for all entities with additional disclosure requirements for public companies) and what are the implications for standard-setter structure and/or processes?
In addressing these matters at a strategic level, the Panel considered relevant studies and other reports on private company financial reporting that have been done over the years by the AICPA, the FAF, and others.
The Panel concluded its work December 2010, when it issued a report
containing its recommendations on the future of standard setting for private companies, to the FAF Board of Trustees (the Trustees). The Trustees’ resulting action plan is expected to be exposed for public comment prior to that plan being finalized.
Staffing was provided by the AICPA and the FAF.