PwC supports the proposed elimination of the development stage entity reporting requirements, but expresses reservations about a change to the consolidation guidance.
PwC commends the FASB for its efforts to identify areas where financial reporting can be simplified and unnecessary complexity can be removed from today’s guidance. PwC supports eliminating the development stage entity reporting requirements on the basis that these reporting requirements are not sufficiently decision-useful to justify the cost of preparing that information.
However, PwC expresses reservations regarding the proposed change to the consolidation guidance. While PwC supports this change in principle, it is not aware of any significant concerns in practice that indicate a change in the consolidation analysis for development stage entities is needed. The proposed change would subject more entities to the more complex consolidation evaluation under the variable interest entity model and incremental disclosures. As consolidation conclusions are unlikely to change in most cases, PwC questions whether the benefits of the change are sufficient to justify its added cost and complexity. Therefore, PwC recommends the FASB perform further outreach to understand the practical implications before changing the consolidation guidance.
PwC further recommends the FASB consider the timing and impact of the proposed change to the consolidation guidance in relation to the broader consolidation project to avoid causing multiple changes in this area of accounting.
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