Well, that only took — let me check my watch here — about six years or so.

In its latest effort to improve the private company standard-setting process, the Financial Accounting Foundation has announced the creation of its new Private Company Council.

According to FAF, the new group will be tasked with two jobs:

1. It will “determine whether exceptions or modifications to existing non-governmental U.S. generally accepted accounting principles are necessary to address the needs of users of private company financial statements.”
2. It will be “the primary advisory body to the FASB on the appropriate treatment for private companies” for items under current FASB consideration.

It's the latest move in a let's-keep-trying-until-we-get-it-right process that began in 2006 with the formation of the FASB's Private Company Financial Reporting Committee (PCFRC). Along the way, the FAF (the FASB's parent organization) has tried a few times to address the need for separate private company reporting standards — and has fallen short of the CPA profession's expectations each time.

Those expectations aren't mind-blowing. The MACPA, the AICPA, and dozens of other state CPA societies simply want to see a new board, independent of FASB oversight, that will help establish private company standards.

In October, the FAF proposed the creation of a private company panel that (a) could have been overruled by the FASB, and (b) would have been chaired by a FASB member — not quite the independence CPAs were seeking.

So CPAs spoke up by the thousands, and this time around the FAF responded by promising the new PCC will feature three “significant” changes:

1. The council chair will not be a FASB member.
2. The council will hold meetings more frequently than originally proposed.
3. The council's size will be smaller than initially suggested.

Is that enough to appease the profession?

“The proof will be in the pudding,” said Tom Hood, the MACPA's executive director. “At the end of the day, it is progress, although it feels as if we're moving ahead at glacial speed.”

Here's the point: It took the FAF an awfully long time to get back to the point where we were years ago with the creation of the PCFRC. Now that we're roughly back on the same track, it's time to get moving. The faster, the better. The gap between public and private companies has only widened in the past few years. That makes action on private-company standards all the more urgent.

There's an interesting side note to all of this:

Back in October, the AICPA indicated that if FAF would not create a truly independent private company standards board, it would take steps of its own in that direction.

Today, the AICPA is responding to the creation of the Private Company Council with praise. In a written statement, Barry Melancon calls the PCC a “solid step in the right direction” and says the AICPA “look(s) forward to continuing to work (with FAF) to effect meaningful changes in U.S. GAAP for private companies and the users of their financial statements.”

At the same time, the AICPA also has announced “plans to develop an 'other comprehensive basis of accounting' (OCBOA) financial reporting framework to meet the needs of some privately held small- and medium-sized enterprises (SMEs), as well as the users of the financial statements of these entities. The SME OCBOA framework,” the AICPA wrote, “will be a less complicated and a less costly alternative system of accounting to U.S. GAAP for SMEs that do not need U.S. GAAP financial statements.”

“One-size U.S. GAAP does not fit all companies, especially smaller privately held businesses,” said AICPA Chair Gregory Anton, CPA, CGMA. “We recognize that the FAF has moved in the right direction and the AICPA will continue to be fully engaged with the FAF and the Private Company Council. While doing so, we will also use our resources and expertise to develop an enhanced OCBOA financial reporting framework that is objective, relevant and responsive to the concerns of preparers and users of small and medium private company financial statements where GAAP financial statements are not required.”

So now we have the FAF's Private Company Council and a new AICPA framework in play. It'll be interesting to watch how they work together going forward.

Read more here:

• New private company standards council established (from Accounting Today)
• FAF CEO Terri Polley explains how new Private Company Council will function (from Accounting Today)
• FAF creates new council to improve standard setting for private companies (from AccountingWeb)
• New board will adapt GAAP to private companies (from CFO.com)
• MACPA panel: Private company standards are essential?
• MACPA white paper: Private Company Standards: Responding to the Reporting Needs of Private Companies and the Users of Their Financial Statements