WASHINGTON (1/31/11)--Standards related to U.S. Generally Accepted Accounting Principles (GAAP) for public companies, and the standard setting process itself, should be reformed to “best meet the needs of users of private company financial statements,” a blue-ribbon panel has recommended. The panel consists of 18 members that represent a cross-section of financial reporting constituencies, including lenders, investors, and owners, as well as preparers and auditors. Karen Kelbly, National Credit Union Administration's chief accountant, contributed to the work of the panel as a participating observer, representing the U.S. Federal Financial Institution Regulatory Agencies. The recommendations were provided in a report that was issued to the Financial Accounting Foundation’s (FAF) Board of Trustees last week. That report called for the establishment of a new board to focus on making exceptions and modifications to U.S. GAAP for private companies, which include credit unions, and recommends the creation of a new set of decision criteria to facilitate a standard setter’s ability to make appropriate, justifiable exceptions and modifications, the FAF said. The new board would be overseen by the FAF, which also oversees the Financial Accounting Standards Board (FASB). The FAF noted that the report “does not advocate a move toward a separate, self-contained GAAP for private companies or a comprehensive reorganization of GAAP.” According to the report, the panel believes that the current system has not done a sufficient job of understanding the information that users of private company financial statements consider decision-useful and how those information needs differ from those of users of public company financials. This and other issues "have caused a lack of relevance of a number of accounting standards for many users of private company financial statements and an overall level of complexity in U.S. GAAP that continues to concern preparers of private company financial statements and their certified public accountant (CPA) practitioners." FAF President/CEO Teresa Polley said that her group “applauds the efforts of the blue-ribbon panel and will thoughtfully and thoroughly consider the issues raised by the panel, as well as the recommended solutions. The FAF will soon gather additional input on the panel’s recommendations. For the full release, use the resource link.