FASB Exposes Private Company Decision-Making Framework for Public
Comment
Norwalk, 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.
"Many private companies issue financial statements
in accordance with U.S. GAAP for the benefit of their investors and lenders,"
said FASB Chairman Leslie F. Seidman. "This proposed guide is intended to help
the FASB and the PCC identify the unique needs of users of private company
statements, while also reducing the complexity and cost of preparing those
statements. Stakeholders have already provided valuable input in the development
of the guide, and we look forward to receiving additional feedback about its
appropriateness, completeness, and cost effectiveness."
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 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 http://www.fasb.org/.