The Ohio Society’s Executive Board had the privilege of meeting with the AICPA’s Arleen Thomas, Senior Vice President Member Competency and Development, as part of its annual planning retreat in August. Arlene oversees many of the areas within the Institute that are fast moving current priorities, and board members enjoyed hearing about AICPA positions on the issues first-hand and sharing their opinions.
The hottest topic of discussion was the now-inevitable movement to international accounting standards in the United States. Arleen noted that the landscape has changed significantly in the past year regarding the certainty of adoption, and issues such as private company standards, requirements of lenders for GAAP and the tax code will all be part of the debate in the U.S. The priority for the profession will be managing an orderly transition so that we can be successful over the next 5 years, looking to the experiences of Canada and the European Union.
Hot questions included:
• Will the U.S. see a LIFO carve-out? The SEC’s Cox has been discussing adopting IFRS-“pure, and users of LIFO face the potential of a very significant tax liability resulting from transition. Possible answers could include a change in the tax code to permit LIFO as a tax treatment only (the likelihood of which could hinge on the elections,) or a phase-in over a period such as 10 years.
• What will be the role of the FASB? Both the international community and the SEC have commented that they see a future role for the FASB, whether it becomes a local arm of the IASB or a commenting body on U.S. implications of international standard-setting.
The largest debate centers on accounting standards for private companies. Will the FASB continue to issue private company standards (and if so, how will it be funded)? What will be the future role of the FASB/AICPA Private Company Financial Reporting Committee (which currently includes “IFRS for private companies” on its agenda)? Will private company standard-setting fall under the IASB guidance for small and medium-size entities? Complicating the answer is the decades-old question of whether standards for private entities are best addressed as exceptions within the rules (as we currently have) or differential standards (“Little GAAP”). Members have weighed in on both sides of that question.
(I’ll save for another post the OSCPA A&A Committee’s opinion that the AICPA should stake out territory providing authoritative guidance for OCBOA, particularly for the smallest of private companies. Arleene’s response to this comment is that the AICPA’s surveys show that “the market values GAAP.” Our committee would push back that there is another layer of the smallest of business where that is not the case.)
Transition presents significant opportunities for CPAs, even for those who don’t serve public companies currently, including assisting clients or employers in making the transition or in working more effectively in an international environment. Most importantly, advocates for the profession need to communicate that no one can expect to be unaffected; we don’t have the luxury of waiting to find out what will happen. Both AICPA and OSCPA will be offering continuing education and articles, first with the goal of building awareness, followed by more technical courses to assist members with implementation.