Should there be a "little GAAP"?
That's a question the American Institute of Certified Public Accountants is currently tackling. Last winter, the New York-based professional organization formed a Private Company Financial Accounting Task Force to determine just how well generally accepted accounting principles are working for different stakeholders.
"The debate [over little GAAP] has been around for 30 years," says Daniel Noll, the AICPA's director of accounting standards. What's made it more pressing now, he explains, is that since Sarbanes-Oxley, some smaller firms believe that "GAAP focuses more on public companies." Moreover, it is not clear that lenders and investors actually find GAAP reporting at private companies relevant to their decision-making process.
The task force is surveying numerous constituents — including CFOs — on their views. "If it turns out GAAP is working properly, our work is done," says Noll. But if it's not, the task force will draw up recommendations on how to refine GAAP to present to FASB and others.