CPC-S filed comment letter to respond the questions from Blue Ribbon Panel today. See the summary of the questions and Key points from the responses as following:

1.      Question: Briefly describe how you use GAAP financial statements in your decision-making concerning private companies.

CPC-S Response:  The most common use for GAAP financial statements is to evaluate the credit worthiness of customers.  Not usually for firm value and exit value. We also use it for evaluation of cash flow from operation and the projections previously made. However, audited GAAP financial statements are secondary to other financial information that we are readily able to obtain if we choose to request such information for our own decision-making purposes. 

2.      Question: Issues or concerns that you may have with respect to the relevance of the information contained in those statements

CPC-S Response:  For private investors or creditors, , the operations of the business and its stewardship responsibilities are more relevant information, not the value of the company These requirements can be obfuscated by revaluation adjustments to fair market values. 

3.      Question: Issues or concerns with current U.S. GAAP as those standards apply to private company financial statements. Are those issues or concerns confined to one or more specific standards, or are they more systemic? Are those issues or concerns largely confined to private companies, or are they broader?

CPC-S Response: We don’t believe it is possible to create a one-size-fits-all set of standards that is relevant to all users.  The problem is systemic. Complexity is a real problem for everyone but public companies enjoy access to public capital as a benefit.  Private companies and their users do not receive the benefits but have the same costs, which often are higher as a percentage of revenues.

4.      Other key points:

·         It would make the case for separate private company standards more imperative. 

·         The idea of ‘except for’ opinions or OCBOA statements results in a higher cost of capital.  We believe there should be a set of standards that will allow for the ‘gold standard stamp of GAAP’ and a clean opinion that is accessible to all companies at a reasonable cost. 

• CPC-S views to the Blue Ribbon Panel