FASB and PCC Finalize GAAP Framework for Private Companies

By Jason Bramwell
 
A decision-making framework that outlines criteria to determine whether and in what circumstances it is appropriate to adjust financial reporting requirements for private companies following US Generally Accepted Accounting Principles (US GAAP) was finalized by the Financial Accounting Standards Board (FASB) and the Private Company Council (PCC) on July 16.
 
The Private Company Decision-Making Framework will aid the FASB and the PCC in identifying opportunities to enhance the relevance of accounting standards to users as well as to reduce the cost and complexity of preparing private company financial statements in accordance with US GAAP. The framework is expected to be issued by the end of the summer.
 
In December 2012, the FASB met with the PCC for the first time to discuss feedback that was provided during an initial comment period on the proposed framework in July 2012. The Financial Accounting Foundation – the FASB's parent organization  created the PCC in May of that year to work with the FASB to determine whether and when to modify US GAAP for private companies.
 
This past April, the FASB issued a second invitation to comment on the decision-making framework, in which private company stakeholders had until June 21 to offer their input.
 

PCC Town Hall Meeting

The PCC will play host to a public roundtable and town hall meeting on November 4 at Ohio State University in Columbus, Ohio.
 
The purpose of the meeting is to seek input from private company stakeholders on issues affecting them, the PCC's projects to date, and the FASB's projects impacting private companies.
The FASB and the PCC have taken measures recently to enhance the relevance and reduce the complexity of certain standards for private companies that prepare US GAAPbased financial statements.
 
On June 10, the FASB endorsed three accounting proposals from the PCC, which involve intangible assets acquired in business combinations, goodwill, and certain types of interest rate swaps. Stakeholders have until August 23 to provide comments on the exposure drafts for the three proposals.
 
A fourth accounting proposal, an alternative within US GAAP for applying consolidation guidance for leasing entities under common control, was discussed by the FASB and the PCC on July 16.
 
The proposed GAAP alternative  PCC Issue No. 13-02, Applying Variable Interest Entity Guidance to Common Control Leasing Arrangements (formerly FIN 46[R] and FAS 167)  would exempt private companies from applying the consolidation guidance for variable interest entities under common control leasing arrangements, according to the FASB.

You may like these other stories...

Effective management accounting practices can improve decision-making in organizations through, among other things, future-focused insight and analysis. But, according to the American Institute of CPAs (AICPA) and the...
Smaller companies slow to adopt new rules for internal controlsSmaller companies are not keeping up with larger rivals in adopting new internal controls as the Dec. 15 deadline approaches, John Kester of the Wall Street...
Ryan to chair tax panel, a possible 2016 platformHouse Republican leaders chose Rep. Paul Ryan (R-WI) on Tuesday to head the powerful House Ways and Means Committee for the next two years, giving him a high-profile platform...

Already a member? log in here.

Editor's Choice

Upcoming CPE Webinars

Nov 24This webcast presents basic principles of revenue recognition, including new ASU 2014-09 for the contract method. Also, CPAs in industries who want a refresher on revenue accounting standards will benefit.
Dec 3The materials discuss the concepts and principles in the AICPA’s new special purpose framework.
Dec 9A key component to improving your firm’s workflow efficiency while enhancing your profitability at the same time is how you leverage emerging technologies.
Dec 9Kristen Rampe will cover how to diffuse the tension in challenging situations in this one-hour webinar.