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Ross Roundtable Discusses Big GAAP vs. Little GAAP

Ross Roundtable Discusses Big GAAP vs. Little GAAP

It’s an old issue that’s been discussed a lot over the years but it’s a very important issue.

Academics, practitioners and policymakers gathered at NYU Stern on September 23 for a roundtable discussion on “Big GAAP vs. Little GAAP: Public Company and Private Company Reporting.” Industry experts discussed the movement to simplify accounting standards for private companies as well as whether public company financial standards should also be made less complex and more cost effective.

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herz Ross Roundtable Discusses Big GAAP vs. Little GAAPRobert Herz, executive-in-residence at Columbia Business School and former chairman for the Financial Accounting Standards Board (FASB) from 2002 to 2010, noted that big GAAP vs. little GAAP arguments have existed for decades: “This is not a new issue. It’s an old issue that’s been discussed a lot over the years but it’s a very important issue.”

lilling Ross Roundtable Discusses Big GAAP vs. Little GAAPMark Lilling, managing partner of Lilling & Company LLP, asserted, “My statistics say there are 29 million private companies and 15 to 17 thousand public companies. … You shouldn’t have the requirements of a smaller number of public companies dictate standards for a larger number of private companies.”

dougher Ross Roundtable Discusses Big GAAP vs. Little GAAPBrendan Dougher, NY metro market managing partner at PwC, asked, “If we’re going to simplify for private companies, why not simplify for public companies, too? Why place the burden on public companies? … Our perspective is, it would be good to have one set of standards. How do you make it relevant to all parties?” He noted an element of risk, however: “What we are also cautious about is what you don’t know until you do it: the unintended consequences.”

siegel Ross Roundtable Discusses Big GAAP vs. Little GAAPNYU School of Law Professor Stanley Siegel asserted, “What the 29 million small companies really need is a set of standards that allow for a level of consistency, that allow for meaningful reporting, but way below the level of the FASB.”

durak Ross Roundtable Discusses Big GAAP vs. Little GAAPBob Durak, director of private company financial reporting for the American Institute of CPAs (AICPA), discussed the Financial Reporting Framework for Small and Medium-Sized Entities (FRF for SMEs™) that AICPA launched in June as a more streamlined option for small businesses: “I think it will be appealing to many companies that don’t need GAAP for their financial reporting … it’s responsive to the needs of small businesses.” He also noted, “I think we’re making some really good progress in the accounting profession on these issues.”

mechanick Ross Roundtable Discusses Big GAAP vs. Little GAAPJeffrey Mechanick, assistant director-nonpublic entities for the FASB, said, “As we seek to bring a better cost-benefit balance within GAAP for private companies, we’re initiating at least potential simplification for all entities from yet another direction. … While the PCC’s [Private Company Council] focus is and will be on private companies … FASB will be looking at whether proposals could be applicable to public or nonprofit companies.”