April 17, 2020

The Private Company Council (PCC) met on Friay, April 17, 2020. Below is a brief summary of issues addressed by the PCC at the meeting:
  • PCC Issue No. 2018-01, "Practical Expedient to Measure Grant-Date Fair Value of Equity-Classified Share-Based Awards": PCC and Board members discussed the progress on a potential practical expedient that would allow a nonpublic entity to determine the current price input of equity-classified share-option awards using a valuation method performed in accordance with the presumption of reasonableness requirements of Section 409A of the U.S. Internal Revenue Code. In February 2020, the Board endorsed the PCC’s decision to issue a proposed Accounting Standards Update on that practical expedient. Because many private company stakeholders currently are experiencing resource constraints and may be unable to provide feedback at this time, the PCC unanimously agreed to delay issuance of the Exposure Draft until later in the second quarter of 2020.
  • Revenue Recognition (Topic 606): FASB staff updated the PCC on current implementation progress with the revenue recognition standard and highlighted several FASB educational and implementation resources. FASB staff also updated the PCC on the recent Board decision to add a project to its technical agenda to amend the effective date of Topic 606 for franchisors that are not public business entities to annual reporting periods beginning after December 15, 2019, and interim reporting periods within annual reporting periods beginning after December 15, 2020. An Exposure Draft will be issued soon for public comment. Additionally, the staff provided background on the new research project to evaluate how to reduce implementation costs related to applying Topic 606 to initial franchise fees received by franchisors, and PCC members discussed their experience with franchise arrangements.
  • Conceptual Framework: Elements, Measurement, and Presentation: FASB staff provided the PCC with an overview of the Conceptual Framework projects. In the second half of 2020, the FASB expects to release an Exposure Draft related to Elements and an Invitation to Comment related to Measurement. PCC and Board members discussed the purpose and use of the Conceptual Framework and the proposed revised definitions of various elements.
  • Current Issues in Financial Reporting: PCC and Board members discussed practice issues as a result of the current business environment under the COVID-19 pandemic. FASB staff provided an update on several emerging issues affecting private companies including:
    • Leases: The Board decided to amend the effective date of Topic 842 for private companies and private not-for-profit entities to annual reporting periods beginning after December 15, 2021, and to interim periods within the fiscal years beginning after December 15, 2022. An Exposure Draft will be issued soon for public comment.
    • Fair Value Measurement: An agenda request was received to suspend mark-to-market accounting. FASB staff provided a reminder of the orderly transaction guidance in Topic 820, Fair Value Measurement, specifically paragraphs 820-10-35-54C through 35-54J. FASB staff encouraged PCC members to reach out if they have questions or encounter interpretation issues with the existing guidance.
    • Interest Income Recognition: The Board recently discussed a technical inquiry received by the FASB staff regarding the recognition of interest income. For illustrative purposes that inquiry included a fact pattern whereby an institution was providing assistance to borrowers impacted by COVID-19. FASB staff acknowledged two appropriate views for accounting for interest income.
    • Small Business Administration Loans: FASB staff noted that questions are arising related to lender accounting for fees received and borrower accounting for loan forgiveness. FASB staff noted that entities scoped out of Update No. 2018-08, Not-for-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made, are not precluded from applying the guidance by analogy when appropriate. Additionally, FASB staff has had ongoing dialogue with both the AICPA and practitioner groups preparing to publish papers discussing those issues.
Additional resources can be found here. Furthermore, the Board emphasized that it continues to monitor conditions and stands ready to support private companies encountering technical accounting issues. Board members encouraged PCC members and other stakeholders to continue providing feedback.
  • Private Company Research Findings: The PCC member from academia presented some of his private company research findings. PCC and FASB members discussed the trends of audited GAAP-based financial statements for private companies and the rationale for why private companies have their financial statements audited, as well as some benefits they appear to receive from doing so.
The next PCC meeting will be held on Wednesday, June 24, 2020, and Thursday, June 25, 2020.


PCC Meeting Recaps are provided for those interested in following the activities of the PCC. Official positions of the PCC and the FASB are reached only after extensive due process & deliberations. More details on the PCC’s input on the FASB’s projects can be found within the meeting minutes, which will be published on the PCC website in the coming weeks.