The Financial Accounting Foundation has issued for public comment a Plan to Establish the Private Company Standards Improvement Council. The plan “calls for the establishment of a new council with the authority to identify, propose and vote on specific improvements to US accounting standards for private companies.” As stated in this press release, the council, if established, would “identify, propose, deliberate and formally vote on specific exceptions or modifications to US Generally Accepted Accounting Principles (US GAAP) for private companies.”
Importantly, this council’s decisions (if approved by two-thirds vote) would still be subject to ratification by the FASB (similar to the current ratification process required for EITF decisions to become authoritative).
While the FAF views the avoidance of a two-GAAP system as being one of the primary benefits of this proposal, others are likely cite that outcome as being one of the biggest problems with the proposal. In particular, Barry Melancon, president and CEO of the AICPA, has been a strong advocate for the establishment of a private company standards board. A statement from Melancon and Paul Stahlin, AICPA Chair, can be found here.
The call for public comments is open through Jan 14, 2012.