Inside view on the decision to support two GAAPs.

A decision to support two sets of Generally Accepted Accounting Principles (GAAP) is not made lightly. Ohio Society member Patricia Piteo, CPA, a partner with Cohen & Company in Youngstown, knows this firsthand.

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Piteo is a member of the AICPA Private Companies Financial Reporting Task Force that recommended creating standards specifically for private company financial reporting. Catalyst editorial staff spoke with Piteo to get an inside view on the task force's momentous decision, which came from months of research and deliberation.

How did you become involved with the task force?

I was greatly excited and honored to be asked to serve on the AICPA Private Companies Financial Reporting Task Force.

I had been serving on the AICPA PCPS Technical Issues Committee, which is a volunteer group representing small and regional CPA firms. This committee represents the perspective of smaller firms and their clients by writing comment letters and meeting with standard setters, such as the Governmental Accounting Standards Board (GASB) and the Financial Accounting Standards Board (FASB).

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I personally saw the difficulties firms and clients were having with new standards. I also saw the reaction FASB had in addressing these difficulties. Over the last couple of years, I saw FASB focus on fixing things from a public company perspective. The result was a good solution for public companies, but a costly one for smaller organizations.

I came to the conclusion that something needed to be done, and expressed my opinion. When the AICPA put together the private company task force, I apparently was remembered. I also had experience working with FASB and knowledge of how other countries have handled the same dilemma.

What findings led task force members to recommend two sets of standards?

GAAP was rated high in a survey of financial statement users.

A number of surveys had been conducted on the benefits of GAAP. However, the last survey with valid empirical data was in the early 1980s. Much has changed since then, resulting in more interest in the usability of financial statements.

In a survey conducted by the task force of practitioners, owners, managers and external lenders--the primary users of financial statements--the findings were by far the most positive of any previous survey.

We heard from all groups that GAAP is good at providing consistent, comparable data. However, many specific GAAP requirements, such as expensing...