Separate private company financial reporting standards long overdue.

• Author: Anton, Gregory J.
• Position: The time is now

Financial statement users need straightforward, understandable information dial addresses what they need to know no more no less. That goes for small, private businesses just as much as it dose large, public companies. Every week I hear the frustrations of my private company clients who believe dial much of what is required lo be included in their financial statements is overly burdensome, lacks relevance and is not useful to the bankers or the private company owners themselves. Lenders, insurers and venture capitalists also have expressed frustration. Now, as AKTA vice chair. I hear the same lament from members in business and industry The time to fix this situation is now.

The CPA profession has been struggling with this issue for more than three decades since before I became a GPA. In that time, several independent [Panels concluded that the unique needs of private-companies, and the users of their financial statements, deserve accounting standards that are relevant and meaningful for them.

The problem has been exacerbated in recent years by accounting and reporting guidelines becoming extraordinarily complex. Much of the complexity relates primarily to larger public companies and their investors. So, win should private businesses especially the very small ones have to follow the same standards?

Only about 15.000 companies are registered with the SEC, compared to about 20 million nonpublic entities. That means more than 00 percent of the nations incorporated businesses are private vet many are still subject to the same generally accepted accounting principles as the other less than 1 percent.

A Historic Opportunity Before Us

Since small businesses account for more than half of private sector employment and about half of the nation's GDP anything that hinders small businesses has an impact on the overall economy. Now is the lime to deliver accounting and financial reporting relief' and help them better allocate their scarce resources toward investment and job creation.

We have in front of us a historic opportunity to relieve this burden on millions of private companies. In late 2009 the AICPA die Financial Accounting Foundation and the National Association of Stale Boards of Accountancy formed the Blue Ribbon Panel on Private Company Financial Reporting to provide recommendations on the future of standard selling for private companies. It included lenders, investors. owners, preparers and auditors with significant financial reporting...