AICPA To Survey Small Businesses On GAAP Reporting NEW YORK (Dow Jones)--To those having a stake in small businesses, here's a question you may want to answer: Do you find useful the financial information provided according to generally accepted accounting principles? The American Institute of Certified Public Accountants is sending out a questionnaire amid renewed complaints from small, privately-held companies about the complexity of such principles, known as GAAP for short. Those who favor GAAP, some say, have focused too much on problems related to publicly-traded companies in the wake of recent scandals at big corporations. As a result, they say, the costs of complying with GAAP can often exceed the benefits because the stakeholders in small companies - including lenders, venture capitalists and equity investors - don't always find the information relevant to their business decisions. For instance, some view a new consolidation rule, called FIN 46, as too complex for smaller, private-held companies because their lenders are more interested in separate financial statements of related concerns than in consolidated financial statements. FIN 46 is intended to help investors better assess companies' off-balance-sheet activity - which was made infamous by the Enron Corp. (ENRNQ) scandal. The AICPA survey, aimed at private companies, their auditors as well as users of their financial statements, is to find out "how's GAAP financial reporting working for you?" said Dan Noll, director of accounting standards at the leading professional organization for accountants. If, indeed, any standards-overload problem for small businesses proves out, "we will propose solutions," Noll said. The AICPA has formed a 16-member task force to spearhead the efforts. It expects to complete the survey by mid-September and to publish the survey results shortly thereafter. To be sure, the Financial Accounting Standards Board, the official source of GAAP, has long recognized that the costs of compliance with GAAP can fall disproportionately on small firms. There have been many instances where the rule makers tried to alleviate the load through reduced disclosure requirements and extended deadlines. But, when it comes to the issues of what to put in the financial statements, when to put them there and what amounts to associate with them, private companies basically have to abide by the same rules as public firms. One recent common concern among small businesses, for example, is the trend toward fair or current market value, instead of historical costs, in corporate accounts. Observable market prices often don't exist for private companies and many of their assets, they say. Such complaints have again triggered the age-old debate over whether small companies deserve a separate set of accounting principles that is simpler and less costly for them to implement. In a December speech at an AICPA conference, FASB Chairman Robert Herz said that, although the board has rejected the notion of "Big GAAP" versus "Little GAAP" many times over the past 25 years, it doesn't mean the issue shouldn't be reexamined again. "I strongly believe, however," Herz said, "that any differential accounting and reporting must be shown to meet the needs of the users of financial statements of small businesses and private companies and cannot just be something designed for the convenience of the companies and accounting practitioners." -###-
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