PRIVATE COMPANY COUNCIL (PCC)
September 12, 2023
The Private Company Council (PCC) met on Tuesday, September 12, 2023. Below is a summary of topics discussed by PCC and FASB members at the meeting:
- Summary of the September 11, 2023 Liaison Meeting with the AICPA Private Companies Practice Section (PCPS) Technical Issues Committee (TIC): PCC members reported on the issues discussed with TIC members during their annual liaison meeting. PCC members shared observations on a variety of topics, including current expected credit losses (CECL) implementation; the implementation of Topic 842, Leases, including the accounting for sale and leaseback transactions and lease modifications; simple agreements for future equity (SAFEs); debt modifications; distinguishing related parties from entities under common control; and stock compensation disclosures.
- Improvements to Income Tax Disclosures: FASB staff provided a project update and summarized recent Board decisions from the August 30, 2023 Board meeting relevant to private companies. PCC members discussed the materiality considerations of the 5 percent threshold related to the disclosure of income taxes paid by jurisdiction. PCC members commented on the estimates and costs involved in providing disaggregated (a) income (or loss) from continuing operations before income tax expense between domestic and foreign and (b) income tax expense (or benefit) from continuing operations between federal, state, and foreign.
- Leases Implementation: FASB staff provided the PCC with an update on the status of the Leases Post-Implementation Review. PCC members discussed recent observations from the implementation of Topic 842, Leases, and feedback received at the PCC Town Hall held at the AICPA Peer Review Conference in August 2023 and the PCC-TIC Liaison meeting. PCC members discussed feedback received on sale and leaseback transactions, materiality and capitalization thresholds, practical expedients, determination of the incremental borrowing rate and use of the risk-free interest rate, and capitalization of operating leases. PCC members also discussed issues that they have recently observed in practice.
- Stock Compensation Disclosures (PCC Research Project): FASB staff and members of the PCC’s stock compensation disclosures working group summarized outreach the working group has conducted since the June PCC meeting with private company preparers and practitioners. PCC members noted that they are receiving helpful feedback from stakeholders on the working group’s research to date.
- Accounting for and Disclosure of Crypto Assets: FASB staff summarized recent Board decisions made at the September 6, 2023 Board meeting. FASB staff members noted that private company stakeholders provided mixed feedback on the proposed reconciliation of opening and closing balances of crypto assets, and that feedback, as well as feedback from prior PCC meetings, were considered in redeliberations. PCC members expressed overall support for the project. A preparer PCC member asked for additional clarification on the Board’s decision not to provide guidance on transaction costs.
- Town Hall/Liaison Meeting Update: FASB staff and PCC members discussed feedback received during the PCC Forum at the AICPA Peer Review Conference and discussed upcoming liaison meetings. PCC members highlighted feedback received from conference attendees about Leases—Implementation, Revenue—Post-Implementation Review, and other private company financial reporting topics. FASB staff also noted that the PCC will hold a liaison meeting with the Risk Management Association’s Accounting Working Group on October 19, 2023.
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.