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Chapter 3 — Financial Statement Preparation and Disclosure Requirements

3.4 PCC Accounting Standards

3.4 PCC Accounting Standards and Practical Expedients Available to Non-PBEs

The PCC uses the private-company decision-making framework to advise the FASB on the appropriate accounting treatment for private companies. Nonpublic companies may have elected to apply alternative accounting standards developed by the PCC and issued by the FASB. On its Web site, the FASB states that the PCC was formed in 2012 and is an advisory body whose mission is to review and propose “alternatives within GAAP to address the needs of users of private company financial statements.” As a result of the PCC’s activities, the FASB has issued accounting standards that have allowed private entities to elect alternative accounting policies intended to reduce the complexity and cost of financial reporting while maintaining decision-useful information for investors. Once a company (even if it qualifies as an EGC) is considered a PBE, it is no longer permitted to apply private-company accounting alternatives. Therefore, any previously elected private-company alternatives would need to be retrospectively eliminated from the company’s historical financial statements before such statements can be included in its IPO registration statement.