FASB Exposes Private Company Decision-Making Framework for Public CommentNorwalk, CT, April 15, 2013—The Financial Accounting Standards Board (FASB), along with the Private Company Council (PCC), today issued an Invitation to Comment: Private Company Decision-Making Framework: A Guide for Evaluating Financial Accounting and Reporting for Private Companies seeking stakeholder input on the proposed private company decision-making framework. The framework is intended to serve as a guide for the FASB and the PCC in determining whether and in what circumstances to provide alternative recognition, measurement, disclosure, display, effective date, or transition guidance for private companies reporting under U.S. generally accepted accounting principles (GAAP).
The FASB and the PCC developed the proposed provisions contained in the Invitation to Comment based on their discussions at the PCC’s February 2013 meeting. During that meeting, the FASB and the PCC deliberated stakeholder feedback on the FASB’s July 2012 Invitation to Comment, which contained initial FASB staff recommendations about the creation of a private company decision-making framework. As a result of their February discussions, the FASB and the PCC made changes to that original proposal, including:
- Removing the industry-specific presumption by having the Board and the PCC consider whether the same industry-specific guidance is relevant to users of the financial statements of both public companies and private companies, and
- Allowing a private company to select the alternatives within U.S. GAAP for recognition or measurement guidance that it deems appropriate, without having to apply all the alternatives within U.S. GAAP for recognition and measurement.
To help the FASB and the PCC identify additional opportunities to improve the guide, stakeholders are asked to provide input on the Invitation to Comment by June 21, 2013. Following the comment period the Board and the PCC will redeliberate the guide.
The Invitation to Comment is available at www.fasb.org. A FASB in Focus also is available at the FASB website.
The PCC was established by the FAF Board of Trustees to work with the FASB to determine whether and when to modify U.S. GAAP for private companies. For more information on the PCC, please visit the PCC website.
About the Financial Accounting Standards Board
Since 1973, the Financial Accounting Standards Board has been the designated organization in the private sector for establishing standards of financial accounting and reporting. Those standards govern the preparation of financial reports and are officially recognized as authoritative by the Securities and Exchange Commission and the American Institute of Certified Public Accountants. Such standards are essential to the efficient functioning of the economy because investors, creditors, auditors, and others rely on credible, transparent, and comparable financial information. For more information about the FASB, visit our website at www.fasb.org.