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.