October 2012 AICPA Council MeetingPosted: October 29, 2012
I attended my last AICPA Council meeting as a member of the Board of Directors last week. While it was not quite as eventful as my first Council meeting it definitely had its moments. The first Council meeting I attended was highlighted by the proposed move of the AICPA operations from New Jersey to North Carolina. The Fall 2013 meeting covered issues from Private Company Financial Reporting to the National Debt Crisis to the AICPA’s pension fund impact on its finances. I will discuss each of those in a little more detail below.
The Council heard from Billy Atkinson, Chairman of the newly formed Private Company Council (PCC). Billy has a long career serving private companies as a member in public practice, but also was one of two dissenting votes on the Blue Ribbon Panel recommendations. FAF recently named him Chairman and Billy provided insight into his view of the work ahead for the PCC. Billy pointed out that work on the framework for when differential standards should exist is a critical first step for both the FASB and the PCC. When pressed on what types of differences he supports, Billy suggested that when it comes to measurement and recognition, any suggested changes may need to be made for all entities and it would be his inclination to first seek for the FASB to review the recognition and measurement issues overall.
We then heard from David Morgan, Chairman of the AICPA Financial Reporting Framework (FRF) Task Force which is creating a standards framework for Small and Medium enterprises. The framework is essentially an enhancement of OCBOA, and will not be considered GAAP, but should offer a comprehensive reporting alternative for small private businesses that do not intend to go public someday. Success of the FRF will depend on educating users – business owners and their bankers – of small business reporting on the higher usefulness of the FRF for small businesses. You can expect to see an exposure draft covering the entire FRF in the next month.
Paul Stebbins reported on the escalating crisis around our national debt. Did you know we are already on a trajectory that is worse than Spain, second only to Greece in the debt crisis triage center? Only record low interest rates are keeping our interest payments somewhat in check. If we return to anything close to normal interest rates our interest payments will explode and we will quickly be paying over a trillion dollars a year in interest alone which doesn’t pay for a single program.
There was also a discussion on AICPA finances that was focused mainly on the impact of the pension plan on AICPA’s reported results. Like every organization with a defined benefit pension plan, declining interest rates have significantly increased the liability, and therefore deficit, reported by the AICPA. This is a non-cash charge and even if interest rates never go back up, the ERISA required cash funding will be paid in over a number of years at a rate the AICPA can afford without negatively impacting the ability to serve its members. The AICPA has already taken a number of proactive steps including freezing the pension plan starting in 2017, and will continue to look at additional alternatives to “de-risk” its pension plan in the future.
While this was my last Council meeting as a member of the AICPA Board of Directors, I was asked to serve an additional year on Council, filling the last year of a three year term ending in October 2013. It was a privilege to serve on the Board of Directors and I am honored the AICPA wants me to stay involved at the Council level. I look forward to continuing to update you on Council activities as well as the many issues impacting our profession into 2013.