A few weeks ago, I wondered why some academics were suggesting that the IASB and FASB compete when almost everyone else is suggesting that they work together.  A recent news release from the FASB got me thinking about this in a different way.
When I was a Research Fellow at the FASB, I had several discussions with Bob Herz regarding possible ways for accounting standard setting to operate.  One of his observations stuck with me – we need only one product (set of standards) for a particular market.  If you have different markets, then maybe you need multiple products.  (Bob, if I mis-paraphrased you, I apologize.)  The analogy was meant to imply that since the FASB and IASB both put high priority on serving the needs of investors in cross-border capital market transactions, the two boards are serving a single market, and thus having separate sets of standards is suboptimal.
The recent news release that caught my eye related to the Blue-Ribbon Panel Addressing Standards for Private Companies.  A majority of the panel believes “there is a need for a new standard-setting model that follows Generally Accepted Accounting Practices (GAAP) with exceptions for private companies. In addition, the majority envisions a separate private company standards board under the oversight of the Financial Accounting Foundation (FAF).”  My take is that the small companies may be more concerned about basic contracting and “stewardship” uses of financial information, implying they are not as concerned with whether international capital market participants can compare their company to other global investment opportunities.  If so (and I am not saying their view is right or wrong), that sounds like a different market that might need a product that differs from what the FASB and IASB provide.
Now back to the academics – perhaps they could make a much more compelling case for competition between an international-capital-market-oriented board and a local-contract-oriented board.  Further, to the extent contracting varies with historical legal development, an argument could be made that one small enterprise accounting standard setter might evolve to serve the needs of businesses operating in (for example) code law countries and another for those in common law countries.  Those two standard setters might also engage in friendly competition amongst themselves and with the international standard setter.
As an educator, I am not thrilled by such competition, because covering multiple standards for a given transaction can be confusing to students.  They already freak out enough when we discuss U.S. GAAP-tax differences.  But if a role exists for competition in standard setting, I think the big versus little competition makes much more sense.  I wonder if the pro-competition academics are following the activities of the blue ribbon panel?