SKR+Co. Alert
By Mike Rowe, Audit Partner
January 25, 2011
Generally Accepted Accounting Principles (GAAP) have become increasingly complex over the past decade. Many of the new accounting standards are issued primarily to address the needs of the users of public company financial statements. Private companies have been saying for years that their financial reporting needs are different from those of large public companies, as the users of their financial statements are different. As a result, consideration is being given to creating separate accounting rules for private companies.
The following are arguments both for and against private company GAAP.
Proponents
Those in favor of creating a private company GAAP raise the following issues about the existing rules:
• Excessive Complexity
• Non-compliance
• Lack of Relevance
Opponents
Opponents of a private company GAAP raise the following issues with private company GAAP:
• Costs to Create and Implement
• Lack of Consistency and Comparability
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