FASB Turns Down AICPA Proposal on Pre-IPO Valuations

An effort by the American Institute of Certified Public Accountants (AICPA) to develop guidelines for valuing stock in pre-IPO companies was turned down by FASB, which must set GAAP standards. FASB members were concerned that the AICPA would not set standards that would prevent abuses. The AICPA approached the issue because of concerns about the issuance of "cheap stock" in pre-public offering companies. There are currently no guidelines about how such stock should be appraised. The AICPA may now develop a "white paper" instead.