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Private Company CFOs Prefer FASB as Standard Setter by Large Margin
28 million private U.S. companies that will be impacted

June 6, 2011 (SmartPros) A national survey of private company CFOs finds that the majority (59%) prefer the FASB as their accounting standard setter. The remainder of the CFOs were split between adoption of IFRS for SMEs (22%) and a separate standard setter for private companies (18%). The responses from CFOs at public companies were similar.



“The preference for the FASB as a standard setter was very pronounced,” notes John Hepp, a partner in Grant Thornton LLP’s Accounting Principles Group, “but it was not an overall rejection of separate GAAP for private companies. A majority of respondents (51%) favors permitting IFRS for SMEs as an option, even though only 22% favor adoption of IFRS for SMEs.”
 
CFOs at pubic companies also preferred the FASB as a standard setter over the IASB by similar margins.
The Blue Ribbon Panel report on Private Company Accounting issued in January of 2011 recommended that the Financial Accounting Foundation “create a separate accounting standards board . . . with the ultimate standard-setting authority to determine and set exceptions and modifications in [generally accepted accounting principles] for private companies.” The Blue Ribbon Commission specifically rejected adoption of IFRS for SMEs, the international accounting standards for private entities issued in July of 2009.
 
“The Blue Ribbon Panel rejected an IFRS-based answer because there has not been a clear direction from the SEC on when public companies in the U.S. will move towards IFRS,” said Meredith Vogel, Grant Thornton Audit senior manager and a staff member supporting the Blue Ribbon Panel.
 
These results and additional findings on differences between how CFOs at private and public companies perceive the objective of financial reporting and the users of financial statements are discussed further in the recently released Grant Thornton white paper Who should set financial reporting standards for private companies? Download the paper at www.GrantThornton.com/PCreporting.
 
Grant Thornton LLP conducted the biannual national survey from March 22 through April 6, 2011, with 318 U.S. CFOs and senior comptrollers participating. For more information about the survey, please go to www.GrantThornton.com/cfosurvey.
 
Ideally, who should set U.S. accounting standards for private companies and not-for-profit organizations?
  Private Public All
The FASB 59% 52% 55%
The U.S. should adopt IFRS for SMEs for private companies 22% 25% 24%
A separate private company or not-for-profit national standard setter that focuses on the needs of users of private companies 18% 18% 18%
Other 1% 5% 3%

 

Should nonpublic entities in the U.S. be allowed to use IFRS for SMEs when preparing financial statements?
  Private Public All
Yes 51% 55% 53%
No 14% 20% 16%
Don't know 35% 25% 31%

 

Ideally, who should set U.S. accounting standards for companies that file with the SEC?
  Public Private
A national independent board supervised by a national regulator (e.g., the Financial Accounting Standards Board) 50% 57%
An international independent board supervised by international entities, such as the International Organization of Securities Commissions (e.g., the International Accounting Standards Board) 24% 16%
A national regulator (e.g., the SEC) 17% 17%
The global accounting profession (e.g., the International Federation of Accountants) 4% 8%
A global body designated by an international entity, such as the Organization for Economic Cooperation and Development, the United Nations Council on Trade and Development, or the World Trade Organization 4% 1%
National legislatures (e.g., the U.S. Congress) 1% 1%

* Percentages may not total 100 due to rounding.

2011 SmartPros Ltd. All rights reserved.

Source: Grant Thornton

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