Private Company Financial Reporting

 By: Dennis Gardiner, Partner |  email

This past spring, the Financial Accounting Foundation, the parent organization to the Financial Accounting Standards Board (FASB), established the Private Company Council (PCC).   The PCC will identify and vote on exceptions and modifications to U.S. GAAP for private companies.  Decisions made by the PCC will be endorsed, rather than ratified by FASB.  Possible exceptions or modifications to existing GAAP will be determined by the PCC, in consultation with FASB.  Upon FASB endorsement, exceptions or modifications will be incorporated into U.S. GAAP.  A framework is still being developed to be a set of criteria for decisions about whether and when to adjust requirements for recognition, measurement, presentation, disclosure, effective dates, and transition methods for standards that apply to private companies.  Also, a consistent, clear definition of a nonpublic entity is still being developed.  By creating this structure, a two GAAP system (Big GAAP / Little GAAP) was avoided.  The end game of these efforts is to make meaningful changes in U.S. GAAP for private companies and the users of their financial statements.