Minding the GAAP: Moss Adams CEO Rick Anderson Discusses His New Role as Head of a Blue-Ribbon Panel on Private Company Financial Reporting

Should private companies adhere to the same set of accounting standards as public companies? This question has been debated for decades by various committees and organizations.  In January, Rick Anderson, chairman and CEO of Seattle-based Moss Adams LLP, was named chairman of a new blue-ribbon panel tasked with making recommendations about the issue to, among others, the Financial Accounting Foundation (FAF), FASB's parent organization. Anderson is a member of the FAF Board of Trustees, was a member of the AICPA Council for three years, and is the immediate past chair of the AICPA Major Firms Group. He joined Moss Adams in 1973, spending his career in the firm's Seattle and Yakima, Wash., offices providing audit and consulting services to manufacturing, agricultural and food processing entities. He was appointed president/COO of the firm in 1999 and became chairman and CEO in 2004. Anderson spoke with the JofA about the blue-ribbon panel and the issues at hand.  Why is this panel being created now, and how did the concept of the blue-ribbon panel originate?  The issue of appropriateness of one set of standards for companies of all sizes and complexities has been an issue for many years. The Financial Accounting Foundation during 2009 undertook a process of having a number of open forums and input sessions at locations around the country, and they specifically invited a very wide spectrum of participants. One of the things that came out very clear from those forums was serious questions by private company constituents--owners, bankers, etc.--that some of the standards being promulgated may not be cost-effective or even provide any valuable information about private companies. Likewise, through a variety of processes and input sessions through the AICPA, this became an increasingly vocal topic. The decision was made (by the three sponsoring groups) that the best way to (address) it would be to form a brand new panel representing a broad base of constituencies to look at it (strategically). JofA: Efforts on this topic have gone back for decades. What went wrong, and how is this effort different?  The biggest issue is the world has become more complex ... fair value, financial instruments, derivatives, recent increases in the required disclosures dealing with income tax matters, the whole issue of consolidation of entities. Some of that complexity primarily relates to larger public companies, yet any time a standard comes out today, the standard applies to every company. (Another issue has been) a very unclear timeline about movement toward international standards. The uncertainty has led people to say, "We can't just sit here and wait." We really need to address this issue now and see if there is concurrence, primarily at the user constituency level, because it is users that need to be the loudest voice in this decision. By users, I mean creditors, lenders, securities and bonding companies, owners who are not active in the business today. What do they need and want in the way of information? That will be a big part of this panel. It's not what the preparer wants to prepare or what the auditor would like to audit. It's what does the end-user feel they need in order to make appropriate decisions.  Is there any group or developments that you'd like to follow within this panel?  IFRS has a new set of standards for small and medium entities. That would be looked at as to how successful it is in countries following IFRS. Canada has moved to a separate set of standards for nonpublic companies. That's a very recent development, so you don't have the test of time on some of these. But I would suspect that the panel will look at that and any recommendations that have been made by other groups (including the Private Company Financial Reporting Committee) regardless of who was the sponsor of those groups. …

Field of study: Business