Establishment of Private Company Council
seeking and considering public comment, announced in May that it
will establish a new body to improve the process of setting accounting
standards for private companies. The new group, the Private Company
Council (PCC), will be overseen by the trustees and will replace the ex-
isting Private Company Financial Reporting Committee (PCFRC), fol-
lowing an appropriate transition period.
mine whether exceptions or modifications to existing non-governmental
U.S. Generally Accepted Accounting Principles (U.S. GAAP) are required
to address the needs of users of private company financial statements.
Second, the PCC will serve as the primary advisory body to the Financial
Accounting Standards Board (FASB) on the appropriate treatment for
private companies for items under active consideration on the FASB's
technical agenda. Working jointly, the PCC and the FASB will mutually
agree on criteria for determining whether and when exceptions or modi-
fications to U.S. GAAP are warranted for private companies.
on proposed exceptions or modifications to U.S. GAAP. If endorsed by
the FASB, the proposed exceptions or modifications will be exposed for
public comment. At the conclusion of the public comment process, the
PCC will publicly redeliberate the proposed exceptions or modifications
and provide them to the FASB for a final decision on endorsement. If the
FASB makes a final decision to endorse, the exceptions or modifica-
tions will be incorporated into U.S. GAAP.
for our efforts to improve the standard-setting process for private com-
panies. We also believe that the AICPA's plan to develop a financial re-
porting framework for smaller private entities, which would be used as
a form of Other Comprehensive Basis of Accounting (OCBOA) report-
ing where appropriate, is an important and complementary undertak-
ing. Taken together, these actions demonstrate the commitment of both
organizations to the private company financial reporting constituency,"
said CTCPA member
materials, key discussion issues considered by the trustees, and PCC
responsibilities and operating procedures, is available on the FAF web-
site at www.accountingfoundation.org.
the PCC via the FAF website. The CTCPA has submitted two members'
names for consideration.
to develop an OCBOA reporting framework
to meet the needs of small closely held
businesses and the users of their financial
statements. The framework is expected
to provide a less complicated and costly
alternative to GAAP for entities without
a GAAP reporting requirement. OCBOA
for financial statement presentation will
blend accrual and income tax methods.
The OCBOA framework will be developed
by AICPA members and staff with small
business experience. It will be exposed for
public comment and the AICPA anticipates
release in the first half of 2013.
ment needs to start with the basics. In or-
der for any such standards to be useful to
practitioners, they should:
and identify underlying concepts. The
Financial Accounting Standards Board
(FASB) has long based decision-making
upon a Conceptual Framework. An
inactive FASB/IASB project (last updated
in November 2010) was revisiting the
Conceptual Framework. Visit www.fasb.org
to learn more.
OCBOA financial statements.
titles and a comprehensive stand-alone
set of meaningful disclosures.
managers and third-party users.
information a priority in any meaningful
authoritative and will not be required to be
used by any entity, practitioners, lenders,
and owner/managers should welcome
this type of reporting guidance. A frame-
work is needed for small, closely held en-
tities to use in the generation of financial
statements prepared periodically for spe-
cific purposes. This will help to reduce
inconsistencies in the presentation of fi-
nancial statements and will provide addi-
tional comfort for preparers and users of