The blue-ribbon panel charged with addressing generally accepted accounting principles for private companies presented its recommendations to the Financial Accounting Foundation on Wednesday, in the form of a 70-page report the FAF is slated to consider at its next meeting in February.

At its core, the report urges the FAF to create a separate board to modify existing GAAP for the needs of private for-profit companies, allowing for “differences, where warranted, in measurement, recognition, and presentation, and not just disclosure” between public and private companies. However, it stops short of asking for a radical departure from current norms. “At least in the near term, the system should focus on making exceptions and modifications to U.S. GAAP,” the report reads, “rather than move toward a separate, self-contained GAAP for private companies or a wholesale reorganization of GAAP.”

This structure offers “the best opportunity to implement change quickly,” says the report, while still preserving some comparability across the financial statements of public and private companies. The board would be supervised by the FAF and would be reviewed in three to five years for possible changes to its structure or mission. The FAF should also come up with a set of decision criteria for when modifications to GAAP are warranted, says the report.

The 18-member blue-ribbon panel, assembled in December 2009, was led by Rick Anderson, chairman and CEO of accounting firm Moss Adams and an FAF trustee. Finance executives on the board included Daryl Buck, former CFO of Reasor’s Holding Co.; Steve Feilmeier, CFO of Koch Industries; and William Knese, vice president of finance and administration for Angus Industries.

The prospect for change comes as a welcome relief to many private-company finance executives. “I think the report is spot-on,” says Chris Rogers, vice president of finance and administration for Infragistics, a privately held software company, and a member of the Private Company Financial Reporting Committee (formed by the Financial Accounting Standards Board and the American Institute of Certified Public Accountants to provide recommendations to FASB). In his view, modifying existing GAAP is a good way to go because “if you start at the ground up, you run into the danger of a disconnect between private- and public-company GAAP,” a particular problem for companies aiming to go public.

Among the standards private-company executives would like to see modified or eliminated, according to Rogers, are those related to options valuation, derivatives, consolidation rules, and uncertain tax positions.

Accounting standard-setters have already implemented at least one of the panel’s recommendations: that a private-company finance executive be a member of FASB. Earlier this month, the FAF announced the appointment of blue-ribbon panel member Daryl Buck, then Reasor’s CFO, to the now seven-member accounting board. Buck will be the first CFO from a privately held company to serve on the board in recent memory, and possibly ever, though a FASB spokesman could not confirm that. (In view of his appointment, Buck did not issue a final vote on the blue-ribbon panel’s draft.)

One potential snag to implementing the recommendations is money. The report notes that “much of the cost for the new board and staff would likely require funding by a viable, new source, such as mandatory annual or one-time (endowment) contributions from stakeholders.”