Efforts on the part of standard-setters to wring some complexity out of financial reporting might be helpful to preparers of financial statements, but investors are starting to pipe up in protest.

The CFA Institute conducted a recent study and survey on investor perspectives of initiatives under way at the Financial Accounting Standards Board to address financial reporting complexity, especially by creating separate accounting standards for private entities. “(FASB) may be reducing time and cost for preparers, but they are shifting it to investors,” says Mohini Singh, director of financial reporting policy at CFA Institute. “They invest across public and private companies, so they need to be able to compare. If you have different standards for public and private companies, that is very difficult.”

FASB’s Private Company Council, formed by the Financial Accounting Foundation after considerable pressure to better address the accounting needs of entities that are not publicly listed, has recommended a handful of changes to GAAP for the sake of private companies and has more changes in the pipeline. In it recent paper, Addressing Financial Reporting Complexity: Investor Perspectives CFA Institute says those efforts take preparers’ concerns into consideration, but not investors’.

According to CFA Institute’s survey, 82 percent of investors polled said they are concerned about decreased comparability as a result of having different accounting standards for public and private entities. Nearly three-fourths said they are concerned about greater complexity under different sets of accounting rules, and 65 percent said they are worried about losing information that they find useful in making investment decisions.

The report also addresses investor concerns around the extension of the complexity issue around private companies into public company accounting standards as well. FASB has considered, for example, making available to public companies a simplification around goodwill impairment that has already been adopted for private companies. Extending the private company approach to public companies would address comparability concerns, but CFA Institute says investors don’t like the simplification for private or public companies. “It would make the statements more comparable, but we lose a tremendous amount of meaningful information,” says Singh.

The report calls for a more complete cost-benefit analysis on FASB’s move to address private company accounting concerns with different standards. “It is unclear whether standard setters have comprehensively weighed the benefits of reduced compliance and administrative costs for preparers against the additional complexity and costs for investors brought about by the creation of differential standards,” CFA Institute says in a statement.

FAF is performing an assessment of the Private Company Council, seeking comment from constituents on how well the process of creating separate standards for private companies is working. The American Institute of Certified Public Accountants, a strong proponent of differential accounting standards for private entities, told FAF that all parties involved have listened to private company concerns. “We can assure the FAF, based on our vast contacts with private companies and their public accounting firms, that the FASB/PCC output has been extremely well received and appreciated, and these same constituents look forward to continued momentum in aggressively addressing private company issues.”

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