Task force recommends pursuing changes in GAAP for private companies.

After conducting extensive research to ensure the opinions of all constituents were heard, the Private Company Financial Reporting Task Force has unanimously recommended that a process be established to evaluate potential changes to generally accepted accounting principles to improve the usefulness of financial reporting for private companies.

Specifically, the task force's recently released report said that GAAP for private companies should be developed based on concepts and accounting that are appropriate for the distinctly different needs of constituents of that financial reporting. The report also concluded that although GAAP exceptions and other bases of accounting are being used and are sometimes appropriate, these exceptions and other bases of accounting are not the best response to the private company financial reporting findings identified in the study.

These conclusions are based on independent research conducted among more than 3,700 lenders, investors, sureties, business owners, financial managers and public accounting practitioners, as well as the perspectives and experiences of the task force members. The task force brought together by the AICPA consisted of representatives involved with private company financial reporting, including private company business owners and financial managers, practitioners, lenders, investors, and a former standards setter. The task force was led by Jim Castellano, a past AICPA chair. More information about the task force, its process, and its report can be found at www.aicpa.org/members/div/acctstd/pvtco_fincl_reprt/index.htm.

Key Findings

The task force's research found that the key constituent groups rated the overall value of GAAP as fairly high in such areas as consistency and in usefulness as a tool in capital allocation decisions. All key constituent groups, however, rated too many GAAP requirements as needing to be more relevant and useful. The task force also...