The newly created Private Company Council identified four areas in December 2012 that will serve as its initial focus in working with the Financial Accounting Standards Board to improve the standards-setting process for private companies.
After the identified items are discussed further, a decision will be made as to whether the projects will be added to the Private Company Council (PCC) agenda.
Then work can begin on determining whether potential modifications need to be made to the FASB Accounting Standards Codification to address concerns of stakeholders associated with private company financial reporting.
The four areas identified for discussions at this point are:
FASB ASC 810, Consolidation. The fundamental issue identified in this guidance relates to whether variable interest entities need to be consolidated by primary beneficiaries of those entities.
FASB ASC 815, Derivatives and Hedging. The main concern in this area is whether “plain vanilla” interest rate swaps should result in triggering the derivative instrument recognition and measurement guidance for private companies.
FASB ASC 740, Income Taxes. Of central concern in this area is how and whether the guidance associated with recognizing and disclosing uncertain tax positions could be toned down for purposes of preparing financial statements of private companies.
FASB ASC 350, Intangibles – Goodwill and Other. The primary concern that has been expressed in this area relates to recognizing and measuring various intangible assets other than goodwill, to include fair value measurements and disclosures that need to be in the financial statements related to these intangible assets.
The PCC was established in May 2012 by the Financial Accounting Foundation to work with the FASB in determining whether and when modifications to U.S. generally accepted accounting principles might be needed to address particular concerns in private company financial reporting.
The initial issues identified for consideration were at the top of the list of concerns expressed by stakeholders in providing written input to the Blue-Ribbon Panel on Standard Setting for Private Companies in 2010, and by participants in private company roundtables held throughout 2010 and 2011.