Art Winstead, Director of A&A at CPAmerica International and recently wrote this article for his Davenport, Marvin, Joyce & Co.’s blog.
Yes, it is a great time to be a CPA. The conversation regarding financial reporting standards in the US for private companies has taken a very interesting turn.
In my opinion, the AICPA has taken an interesting path. They are endorsing the FAF decision for introducing the Private Company Council, but at the same time announcing that they are establishing an OCBOA group to set OCBOA standards for SMEs. The assumption may be SMEs with all private companies. I personally am not satisfied with how SMEs are determined in the IFRS framework for SMEs. But, that’s just me.
So where will we be when, and assuming this OCBOA for SMEs framework, is indeed developed by the AICPA?
As you may recall, the AICPA made a hard decision in the 1970′s to get out of the accounting standard setting business and develop standards for reporting on financial statements using a specific framework of accounting standards, i.e., FASB, GASB, FASAB, IFRS etc. Those same reporting standards provide guidance for accountants and auditors to use if an entity is using an OCBOA framework. Without question, that is summarizing the 1970s process in very brief terms.
I believe most members of the AICPA will endorse this role. It will make financial reporting “easier,” seemingly less complicated, and perhaps cost efficient for entities using the AICPA OBOA framework. Morevoer, it will also be interesting to see if the AICPA amends the Code to add the AICPA SME framework as a “permitted” financial reporting framework and the OCBOA “tag” gets lost?
The users of financial statements, primarily creditors and owners in our member firm client base, will have to make a decision; OCBOA statements using standards established by the AICPA or “GAAP” statements using standards set by the FASB/FAF Private Company Council.
This indeed will be fascinating to watch.
Art Winstead is the Director of Accounting and Auditing Services for CPAmerica International. He has over 30 years of experience with Davenport, Marvin, Joyce & Co., LLP. He manages technical resources, engagement support, audit practice matters, reviews A&A publications for CPAmerica and is a part of the Expert Services team.