Private firms, especially smaller ones, aren’t required to follow public-company accounting rules—but many do anyway.
A new survey of 542 CFOs at U.S. private firms found that most are still reporting under GAAP (Generally Accepted Accounting Principles), the accounting “gold standard” behind the financial statements investors and regulators expect from public companies.
And here’s the twist: lenders matter — but the boss matters almost as much.
“Normally… the first answer people say is ‘well my bank forced me to do it,'” Bradley Hendricks, a University of North Carolina professor involved with the research, told the Financial Accounting Standards Board’s Private Company Council on March 3, 2026. But what surprised the researchers, he said, is that “senior leadership preferences are just as influential as the bank lenders.”
In other words, plenty of chief executive officers and chief financial officers (CFOs) are choosing U.S. GAAP because they want it — not because some loan agreement has them in a headlock.
GAAP is Common — but Not Always “Pure”
The research team emailed more than 42,000 CFOs and ended up with 542 usable responses, mostly from small and mid-sized businesses.
When asked how they prepare financial statements:
- 68% said U.S. GAAP
- 25% said GAAP with exceptions (translation: “GAAP… mostly,” with carve-outs)
- 22% said tax- or cash-basis accounting
- Less than 1% said they don’t prepare financial statements at all
But the real peek behind the curtain is that companies aren’t picking one lane and staying there. CFOs could select multiple reporting bases — and the researchers found 21 different combinations.
That suggests many private firms are keeping multiple versions of the numbers: one set for one audience, another for someone else.
So the old argument — “either you do GAAP or you don’t” — doesn’t match reality.
The “Wait, What?” Stat: GAAP Without the Bank
The biggest eyebrow-raiser: 64% of companies without bank financing still said they use GAAP.
Yes, lenders still have influence. When CFOs rated who drives the GAAP decision on a 0-to-6 scale, bank lenders ranked first (4.75).
But senior leadership came in right behind (4.63) — basically a tie.
One council member, Robert Messer, joked the findings hit a nerve: companies should use financial statements to run the business better — yet too often they’re produced to satisfy someone else.
Another member, Douglas Uhl of Chick-fil-A, said the results match what he sees: GAAP is treated like a status symbol.
“GAAP is viewed as the gold standard,” he said — even if a company isn’t planning to borrow or go public. If you want to look “top tier,” the thinking goes, you stick to GAAP.
Autumn Hindman, CFO of KNS International, pointed to another motive: keeping options open.
Even if you don’t need financing today, she said, tomorrow could bring a loan, an exit, or major growth — and starting with GAAP early can help you avoid a messy pivot later.
Why Do it? Because it Helps Outside — and Inside
Asked what GAAP delivers for outsiders, CFOs gave the classic answers:
- Better access to lending (average rating 4.40)
- Better lending terms (4.16)
- Readiness to sell or go public (nearly 48% said GAAP helps “very much”)
CFOs described GAAP as a “common language” when talking to lenders. One said a founder who wanted to sell learned fast that the first step was getting onto accrual accounting.
Suppliers and customers? Not so much. CFOs said they rarely hand over full GAAP financial statements to vendors or customers.
But the surprise is how much CFOs said GAAP helps internally, too:
- Improved budgeting (44% “very much”)
- Better cash-flow forecasting (43% “very much”)
- Better profitability analysis by product/customer/segment (42% “very much”)
One CFO described GAAP as a guardrail — a way to keep the numbers from turning into whatever the founder “feels like that week.” In other words: GAAP gives finance leaders something sturdy to point to when they have to say “no.”
CFOs Aren’t Screaming About Cost — Mostly
Another finding that cuts against the stereotype: most CFOs didn’t describe GAAP as unbearably expensive.
The biggest burden, they said, is management time and attention. But across cost categories, more respondents said they were “not concerned” than “very concerned.” Even litigation risk didn’t rate as a big fear.
Uhl offered a practical explanation: maybe CFOs aren’t calling it a concern because they’ve already swallowed it as the cost of doing business.
And the researchers tested a popular assumption — that smaller firms feel the pain more — and didn’t see it. Companies with fewer than 100 employees didn’t report bigger cost worries than larger firms.
GAAP Doesn’t Always Mean an Audit
Here’s another reality check: lots of private firms use GAAP without getting the kind of assurance outsiders assume.
Among GAAP users:
- 60% had a formal audit
- 21% had a compilation (no assurance; accountant formats statements)
- 13% had a review (limited assurance)
- 6% had none of the above
So more than a quarter of GAAP-using firms rely on a compilation — or nothing at all.
And audits aren’t just for companies with loans. 51% of firms without bank financing still got audited, implying some companies pay for audits for credibility, governance, or future flexibility — not just because a lender forced it.
The One Rule That Makes CFOs Groan: Leases
If standard-setters want to know what private companies hate most, the survey had a clear winner: lease accounting.
When CFOs rated specific standards they actually deal with, most came out as more useful than costly.
Except leases.
Lease accounting (ASC topic 842) scored lowest on usefulness (3.21) and highest on cost (3.93) — the only topic that looked net negative.
One CFO offered a brutal example: his company leases 90 vehicles. To be fully compliant, he said, could take one to two employees — roughly $300,000 a year. Then he posed the question workers would actually care about: do you want GAAP-perfect lease accounting… or $300,000 more for bonuses?
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