CleanTech OC Daily - 12/12/12

Wednesday, December 12, 2012

Private companies finally (may) have a set of their own accepted standards
Reduces complications, expenses of GAAP

By Scott Appel, CPA

As they grow their private companies, one of the last - if not the last thing - owners want to spend time and money on are complicated financial reporting requirements. Sure, if the company plans to go public, there are good reasons to comply with U.S. Generally Accepted Accounting Principles (GAAP); but for many others, the focus is on growing their company.

In the long battle between “Big” and “Little” GAAP, not much progress has been made in helping smaller companies with few intentions of going public, those entities that aren’t forced to use GAAP reporting. Private companies and users of their financial statements complain that GAAP requires accounting and reporting that is not relevant or useful in decision making. They argue that GAAP is overly complex and leads to unnecessary costs in financial statement preparation and in performance of audit, review and compilation services.

The most common objections include: (1) GAAP requirements that require two sets of financial statements and self-report “uncertainties” about income taxes; (2) costly appraisals to mark-to-market assets such as securities and real estate at “fair value;” and (3) having to report on consolidated entities. Read more at Hein.

GTM is publishing a new report entitled The Soft Grid 2013-2020: Big Data & Utility Analytics for Smart Grid that indicates that data analytics will be the next growth market in smart grid. GTM is forecasting $322.5 million to be spent on analytics in the U.S. in 2012, reaching $1.4 billion by 2020, with a cumulative $8.2 billion to be spent between now and 2020. While most of the spending will occur in the U.S., Europe, Asia, and Latin America will eventually increase spending relative to the U.S.

According to a Pike Research report, it is estimated that energy management software (EMS) and services industry will grow to $5.5 billion by 2020. Industry leading vendors are able to offer customers tools to measure energy consumption and identify operational inefficiencies which leads to major cost savings. Additionally, with the re-election of President Obama, there will be continued focus on the EMS market giving VCs long-term opportunities to fund a growing sector.

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