Proposed New Accounting Body for Private Companies

The Financial Accounting Foundation, the parent organization of the Financial Accounting Standards Board (FASB), plans to encourage modification of Generally Accepted Accounting Principles (GAAP) for private companies. The modification would be developed by a group called the Small Company Standards Improvement Council and might eventually result in a new body parallel to FASB. In an October 4 article, the Financial Times describes the motivation for the possible modification as "concerns that the full set of accounting principles is unduly complex and burdensome for smaller companies." Two areas specifically mentioned of concern to the employee ownership community are fair value assessments and stock option valuation. The proposal will require extensive review, so even if it is adopted, it will be probably some years before it goes into effect. The Financial Accounting Foundation's Web site offers more details and a request for comments.