In January, the panel issued , containing two primary recommendations: the development of differential standards for private companies, and a separate accounting standards board for private companies.

Melancon notes that the U.S. is home to about 28 million private companies, about eight million of which file financial statements with bankers and sureties. These eight million private companies, along with about 15,000 public companies, account for almost the entire U.S. economy. However, GAAP mostly addresses just the public 15,000. "Shouldn't we have a system set up to focus on the other half?" Melancon asks.

As it is now, many private company CFOs go through the exercise of re-stating their GAAP-compliant financial statements in order to meet the needs of bankers, says John Hepp, a partner in the accounting principals consultation group with Grant Thornton. While traditionally the goal of financial reporting has been to report the results of transactions, over the last 15 to 20 years, FASB has focused on capital allocation, which is a measure of greatest use for public companies. "Private companies look to bank loans. There is a difference in the amount and type of information they need."

"The complexities and nature of reporting for large (public) companies has so far outpaced what the average commercial lender may want for a company that's less than about $30 to $40 million in revenue," says Darrin Abernathy, chief financial officer with Entec Services Inc. an environmental testing company based in Pelham, Ala.In most cases, the loans are secured with an asset -- say, inventory or accounts receivable -- and the lender's greatest concern is the quality of the collateral.

Forcing smaller companies with relatively simple corporate structures to comply with GAAP makes the financial reporting process less efficient, Abernathy adds. "I'm not advocating a lesser standard, but ones that are focused on what the average banker needs."