Summary of Board Decisions
Summary of Board decisions are provided for the information and
convenience of constituents who want to follow the Board´s deliberations. All of
the conclusions reported are tentative and may be changed at future Board
meetings. Decisions are included in an Exposure Draft for formal comment only
after a formal written ballot. Decisions in an Exposure Draft may be (and often
are) changed in redeliberations based on information provided to the Board in
comment letters, at public roundtable discussions, and through other
communication channels. Decisions become final only after a formal written
ballot to issue an Accounting Standards Update.
July 16, 2013 Private Company Council Meeting
Private
Company Decision-Making Framework. The Board and the Private Company Council
(PCC) redeliberated the Private Company Decision-Making Framework: A Guide
for Evaluating Financial Accounting and Reporting for Private Companies
(guide). The Board and the PCC voted to finalize the guide based on
decisions reached at this meeting, which are outlined below.
Differential Factors
The Board and PCC decided that the six
differential factors in the guide are appropriate and directed the staff to make
some nonsubstantive clarifications that would increase consistency between the
differential factors section in the beginning of the guide and the basis for
conclusions.
Transition
The Board and the PCC decided
that the requirement of quantitative information about the adoption of an
alternative transition method by a private company should only be considered in
limited circumstances where the nature of the amendment to existing guidance
affects information that users of private company financial statements find
relevant.
Industry-Specific Guidance
The Board and the
PCC decided to remove special consideration of industry-specific guidance within
the display module to eliminate redundancy, because the guide already includes a
presumption that financial statement display guidance is relevant to users.
In addition, the Board and the PCC decided to add a consideration for cost
and complexity in addition to user relevance within the industry-specific
guidance section of the disclosure module and the recognition and measurement
module. Thus, the consideration of industry-specific guidance would be similar
to the consideration of non-industry-specific guidance. However, the guide would
acknowledge that there is a greater likelihood that industry-specific guidance
is relevant to users of private company financial statements.
Access
to Management
The Board and the PCC reaffirmed their consideration
of access to management in the disclosure module but decided to remove access to
management as a consideration in determining whether a recognition and
measurement alternative for private companies should be permitted.
Recognition and Measurement Questions
Question 1.5h (access to
management) will be removed from the guide due to the Board´s and PCC´s decision
related to access to management.
The Board and PCC decided to improve the
wording of question 1.5e (probable threshold) to clarify the meaning of the
question.
They also decided to remove question 1.5i; however, the guide
will acknowledge that the lag between the year-end reporting date and the date
financial statements are issued and made available to users is a difference
between private and public companies due to statutory filing requirements for
public companies.
All or Nothing
The Board and the PCC
reaffirmed their decision to generally permit a private company to select the
alternatives within recognition or measurement guidance that it deems
appropriate to apply; however, the Board and the PCC may require certain related
alternatives be elected as a group.
Preferability
The
Board and the PCC decided not to address the assessment of preferability for
private companies in the guide.
Determining the Effective Date
The Board and the PCC reaffirmed their decision that private
companies generally should not be required to adopt amendments during an interim
period within the fiscal year of adoption.
Agenda Decision:
Development Stage Entities. The FASB added a narrow scope project to its
agenda to address the concerns of both nonpublic and public companies regarding
development stage entities. The scope of the project is to eliminate the
requirements for inception-to-date information for development stage entities.
However, the Board will conduct additional outreach with users of public and
private company financial statements to determine whether to require new
disclosures for development stage entities.