In this paper, we (the Financial Reporting Policy Committee of the American Accounting Association's Financial Accounting and Reporting Section) consider the 2011 Plan to Establish the Private Company Standards Improvement Council authored by the Financial Accounting Foundation (FAF). The FAF's proposal called for a standard-setting approach more sensitive to the needs of private companies, with the likely outcome being different accounting and disclosure standards for these companies than for public companies.
Members of the committee have differences of opinion about the FAF's proposal. Five members generally support the FAF's plan (though raising significant implementation issues), while six oppose it and instead argue against different reporting standards for private companies.
In this paper, we discuss three issues and present points and counterpoints for each, along with other related standard-setting concerns. This approach is designed to present our differing views on these issues clearly, to help standard setters, preparers, users, and academics form their own views on this highly controversial matter.