FASB Chairman Sees Need to Review Private Company GAAP

FASB Chairman Robert Herz sat down with BNA staff correspondent Steve Burkholder Dec. 21 to discuss a wide range of issues, including convergence, financial instruments, and the SEC road map for convergence with IFRS.  The full interview is available in the Jan. 8 issue of Accounting Policy & Practice Report

Previously, the FASB chairman has expressed the view that accounting principles for private companies in the United States should generally be the same as for public companies. Because the United States is considering requiring its public companies to follow IFRS rather than U.S. GAAP, Herz said it is time to reconsider the issue of private company accounting.

He took note of the Dec. 17 creation of a blue-ribbon panel by the Financial Accounting Foundation and the American Institute of Certified Public Accountants to explore how accounting standards can best meet the needs of users of private company financial statements. 

"I think it is appropriate to look at this again, in part because of the possibility of U.S. public companies moving to IFRS at some point in the future, the existence of the IASB's small and medium sized enterprises standard [IFRS for SMEs], and things that have gone on in Canada, the U.K., and other countries," Herz said.

"My own point of view, at least going into it, would be that if the U.S. were to go to IFRS for public companies, then there ought to be a vertically integrated version of IFRS for private companies," Herz said.