Compilation and Review of Personal Financial Statements

Those of you who may be engaged to compile or review personal financial statements will find an exhibit issued by the AICPA to their Guide, Compilation and Review Engagements of interest.

The exhibit covers compilations and reviews of personal financial statements. It points out that AR section 80, Compilation of Financial Statements, and AR section 90, Review of Financial Statements (AICPA, Professional Standards, vol. 2) are applicable to compilations and reviews of personal financial statements in the same manner as to compilations and reviews of financial statements of commercial entities. The exhibit provides specific guidance regarding how those AR sections are applied in compilations and reviews of personal financial statements.

It reminds us that FASB ASC Section 274 says that personal financial statements should present assets at their estimated current values and liabilities at their estimated current amounts at the date of the financial statements.

It contains illustrations of engagement letters for compilations and reviews of personal financial statements; client representation letters; as well as illustrations of the accountant’s compilations and review reports.

This exhibit may be downloaded from the AICPA website at http://www.aicpa.org under InterestAreas/AccountingAndAuditing/Resources/CompReview.

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Blue-Ribbon Panel Picks Differential GAAP

The Blue–Ribbon Panel on Private Company Standards (the Panel) met for the fourth time October 8, 2010 in New York. Previously the Panel has considered seven alternative standard–setting models and structures for private companies including one that retained the current model and two that incorporated IFRS for SMEs. They eliminated four of the models and retained three. The models were further delineated between a restructured FASB Board and a separate private company standards board.

At the October meeting after thoughtful discussion a majority of panel members favored differential GAAP and a separate board.

On October 19, 2010 at their fall meeting the AICPA Governing Council approved a resolution supporting work of blue ribbon panel on private company financial reporting. An overwhelming voice vote supported the resolution. The Council declared the profession's readiness to implement differential GAAP for private companies as determined by a separate standard-setting board.

Those recommendations will be included in a report to the Financial Accounting Foundation (FAF). The separate board would consist of people with private company experience and report to the FAF, which oversees the FASB and GASB.

How will differential GAAP affect your practice?
Tell us how you think it will affect your practice by adding a comment.

The minutes of the Blue-Ribbon Panel's meetings are available on FASB website, http://www.fasb.org/ under Standards.

New Publication
Our newest publication is the Quarterly Accounting and Auditing Reference Guide, Issue 2. Focusing on accounting, auditing and reporting issues with wide practice applications, this reference aid will benefit non-governmental accountants in public accounting and private industry. Available now at www.cpafirmsupport.com/home/OurServices/tabid/65/Default.aspx
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FAF/AICPA/NASBA Blue-Ribbon Panel on Standard Setting for Private Companies is Seeking Input from Accountants

The American Institute of Certified Public Accountants (AICPA), the Financial Accounting Foundation (FAF; the parent organization of the Financial Accounting Standards Board (FASB)), and the National Association of State Boards of Accountancy (NASBA) have established a “blue ribbon" panel (the Panel) to address how accounting standards can best meet the needs of U.S. users of private company financial statements. The Panel will conclude its work and issue a report, with any recommendations on the future of standard setting for private companies, to the FAF Board of Trustees (the Trustees) in approximately one year. The Panel’s report will be made available to the public and the Trustees’ resulting action plan is expected to be exposed for public comment prior to that plan being finalized.

The Panel will comprehensively review the current system of standard setting for private companies in the U.S., including the following matters:

• Who are the actual users of private company financial statements and how do they use GAAP financial statements in their decision making?
• What is the key, decision-useful information that the various users need from GAAP financial statements?
• Are current GAAP financial statements meeting those needs? Why or why not?
• Are the benefits of GAAP financial statements outweighing the costs of preparing those statements for private companies?
• How does standard setting for private companies in the U.S. compare to standard setting in other countries, both those that have adopted IFRS for Small and Medium-Size Entities and those that have not?
• To the extent that current GAAP is not meeting user needs in a cost-beneficial manner, what are some possible alternatives for private company standards (e.g., separate, stand-alone standards; base-level standards for all entities with additional disclosure requirements for public companies) and what are the implications for standard-setter structure and/or processes?

The Panel is currently seeking input from accountants regarding these matters at: http://www.fasb.org/cs/ContentServer?site=FASB&c=Document_C&pagename=FASB%2FDocument_C%2FDocumentPage&cid=1176157332360 . The time to have our voices heard is now!