On February 12, the Private Company Council (Council)1 held its second meeting with the FASB (Board). Agenda items included discussing the private company decision-making framework (the "framework"),2 determining which projects to add to the Council’s technical agenda, selecting additional accounting topics for pre-agenda research, and providing input on selected current FASB projects
Private company decision-making framework
Following input received from the Board and Council, the FASB staff was directed to make a few amendments to the draft framework, including:
The Council and Board also agreed that the framework will not have to be finalized prior to the Council discussing and voting on matters on its technical agenda, or the Board deliberating the endorsement of a proposed modification.
Projects added to the Council’s technical agenda
The FASB staff presented four issue papers providing background on topics identified at the inaugural Council meeting in December.3 The following topics were formally added to the agenda:
The Council deliberated whether it should add a project on accounting for uncertain income tax positions. It did not add the project, but acknowledged that further feedback from stakeholders should be solicited on this topic.
The Council directed the FASB staff to prepare pre-agenda research papers on stock-based compensation and development stage enterprises. The Council also provided input on current FASB projects, including revenue recognition, going concern, and the Emerging Issues Task Force project on pushdown of new basis accounting.
Concerns about the complexity and relevance of US GAAP have been noted by private company stakeholders for some time. Similar concerns have also been raised regarding public companies and not-for-profit organizations. Improving standards for private companies will be the focus of the Council. In addition, the Board may choose to expand some modifications to other entities as part of its endorsement process.
In March, the Council and Board expect to expose the draft framework for public comment for a period of 90 days.
The next Council meeting is scheduled for May 7, 2013. At that meeting, the Council is expected to discuss the three projects on its technical agenda and whether to add new projects to its agenda. The Council will also provide input on current FASB projects.
PwC clients who have questions about this In brief should contact their engagement partner. Engagement teams that have questions should contact William Schramm (1-973-236-4586) or Dieter Wulff (1-973-236-4856) in the National Professional Services Group.
1 The Council was established in 2012 to determine when modifications to US GAAP should be considered for private companies. Modifications proposed by the Council are subject to endorsement by the Board. The Council also serves as the primary advisory body to the Board on private company matters.
2 Refer In brief 2012-31, FASB issues Invitation to Comment on Private Company Decision-Making Framework, for more information on the invitation to comment.
3 Refer In brief 2012-56, Private Company Council holds its inaugural meeting.
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