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New accounting oversight agency to govern private firms

The Financial Accounting Foundation voted recently to approve a new body gover

As expected, the Financial Accounting Foundation on May 23 voted to approve the creation of a new accounting standards body that will oversee private companies.

The new Private Company Council will make it easier for the nation's 28 million privately-held enterprises to follow accounting standards by working with the Financial Accounting Standards Board to find exceptions in, and make adjustments to, current policies, reported The Wall Street Journal. Most of the nation's rules affecting financial reporting are aimed at publicly held corporations, which have a transparency obligation to stockholders. Those obligations do not apply to private firms, but the accounting standards do.

"Private companies are critical to the vitality and growth of the U.S. economy," said Jeff Thomson, president and CEO of the Institute of Management Accountants. "We indicated early on that FAF achieved the proper balance in its October recommendations - a standards setting process that gives private companies credibility, flexibility and agility in creating sustainable economic growth."

By not subjecting private companies to extraneous guidelines, accountants can be freed up to focus on other areas of regulatory compliance.