CPAs have a message for the Financial Accounting Foundation in their ongoing battle over private company accounting standards, and it goes something like this:

Game on.

The AICPA has issued an ultimatum of sorts to the FAF: Create a separate, independent private company standards board, or watch the AICPA take steps of its own in that direction.

A little history here:

In January 2011, the Blue Ribbon Panel on Standard Setting for Private Companies called for the creation of a new board that would build the blueprint for private company standards. The AICPA backed that proposal, as did thousands of CPAs and most state CPA societies throughout the country. An MACPA task force went so far as to release a white paper that called for the creation of a separate, independent board devoted to private company reporting issues.

“It is clear private company stakeholders see a need to improve standards for private companies,” the white paper concludes. “… Any further studies should be limited to determining how the recommended changes can be implemented and not continuing to study whether changes are needed.”

The profession's point was clear: In this chaotic economic environment, the Financial Accounting Standards Board is rightfully focused on public company issues. It must leave private company standards in the hands of a separate, independent board.

FAF trustees didn't see it that way. In October, they announced a plan to create what they're calling the Private Company Standards Improvement Committee. That committee would not be independent. In fact, it would be overseen by the Financial Accounting Standards Board and chaired by a member of FASB. In addition, writes Accounting Today's Michael Cohn, “(a)ny changes in accounting standards for private companies would need to be approved by a two-thirds majority vote of the new council and would then be forwarded to FASB for ratification.”

That plan doesn't sit well with the AICPA. At the annual fall meeting of its governing Council, the AICPA had this to say:

“Either FAF moves to adopt the Blue Ribbon Panel on Standard Setting for Private Companies’ recommendations for a separate board — which is the AICPA’s preference — or the AICPA will consider other options.

“If FAF continues to pursue its current proposal, the AICPA board of directors will look at other solutions for addressing the needs of private companies. This could include creating a separate standard setting body to develop private company generally accepted accounting principles (PCGAAP) or a comprehensive private company-specific basis of accounting that would deliver meaningful, lasting improvement to private company financial reporting consistent with the Panel’s recommendations.”

Time will tell what the FAF thinks about that line in the sand.

In the meantime, the AICPA is urging CPAs to voice their support for a separate private company standards board (or opposition to the FAF proposal — whichever you prefer). They can do so by using this fast, easy tool to send comments about the FAF proposal before the Jan. 14, 2012 deadline.

Have an opinion? Voice it now. Write to the FAF and join the debate.