As one whose family roots can be traced to Rome and
Calabria, I pride myself in my appreciation and knowledge of my ancestral
cuisine as well as the wonderful byproducts that emanate from the vineyards.
So it would probably come as bit of a surprise that I
frequent a local pizzeria operated by Fernando, a Paraguayan, whom I often kid
that because his expertise in all things red sauce, he must have distant
relatives somewhere in my homeland.
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But he is like millions of other small businesses in this
country, with financial reporting needs as different from entities such as
General Electric or IBM as the distance between Rome and Asuncion.
At last week's Fall Meeting of Council of the AICPA, the
three-decade-old debate on separate reporting standards for private companies
emerged once again, particularly in light of the SEC refocusing its attention
on the roadmap to adoption of IFRS.
Judith H. O'Dell, chair of the Private Company Financial
Reporting Committee - a joint task
force between the American Institute of CPAs and the Financial Accounting
Standards Board - told several hundred attendees that it's time to give separate
GAAP serious consideration.
But while the issue has progressed somewhat, it's also
been stymied. Despite the incredible census divide between the number of public
companies and private entities, the reporting needs of public investors have
always come first on the "to-do" docket.
At the conference O'Dell revealed the results of a recent
study conducted by Big Four firm Deloitte, which showed that 51 percent of the
respondents indicated the need for a separate GAAP for private companies.
But statistics and surveys aside, the reality of the
situation is that FASB has never forged a reputation for expediency when
setting GAAP, and without accelerants such as lawmakers pounding on their door
to modify fair value, you can be certain no one in Norwalk will be elbowing
their way to take the lead in setting private standards.
Nor is it likely that the recent issuance of IFRS for
SMEs by the International Accounting Standards Board will the panacea for the
needs of private companies as evidenced by the fact that several international
standard-setters have not accepted them.
But something resembling measured progress in this area
will probably have to happen fairly quickly, or it will likely be again buried
- this time amidst a flurry of current headline-grabbing issues like financial
market reform, ObamaCare and of course, IFRS.
Until then, Fernando will continue to record sales of his
entrées like the spectacular calamari fra diavalo the same way GE does.
