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Final report on establishing the Private Company Council

  • FAF (old) Image
  • PCC (Private Company Council) (mid blue) Image

May 31, 2012

The Financial Accounting Foundation (FAF) has issued its final report on establishing the Private Company Council (PCC), which will determine whether exceptions or modifications to existing U.S. GAAP are necessary to address the needs of users of private company financial statements. The final report spells out the details on the new council.

As reported earlier, the FAF Board of Trustees have announced the establishment of a new body, the PCC, to improve the process of setting accounting standards for private companies. The final report published yesterday gives all the details concerning the role and the responsibilities of the PCC (the summary below is based on extracts from the final report).


  • Authority and critical responsibilities  The PCC will have two principal responsibilities: (1) to determine whether exceptions or modifications to existing nongovernmental U.S. GAAP are required to address the needs of users of private company financial statements and (2) to serve as the primary advisory body to the FASB on the appropriate treatment for private companies for items under active consideration on the FASB’s technical agenda.
  • Membership and terms  The PCC will be comprised of 9 to 12 members, including a chair, all of whom will be selected and appointed by the Board of Trustees. The PCC chair will not be affiliated with the FASB and will have had substantial experience with and exposure to private companies during the course of his or her career. PCC members will include users, preparers, and practitioners who have significant experience using, preparing, and auditing (or compiling and reviewing) private company financial statements. Members will be appointed for a three-year term and may be reappointed for an additional term of two years.
  • FASB liaison and staff support  A FASB member will be assigned as a liaison to the PCC. FASB technical and administrative staff will be assigned to support and work closely with the PCC to leverage the FASB’s resources and avoid duplication of efforts.
  • Meetings  During its first three years of operation, the PCC will hold at least five meetings per year, with additional meetings if determined necessary by the PCC Chair. The meetings of the PCC will be open to the public.
  • PCC agenda setting and due process for existing U.S. GAAP  The PCC will determine its agenda in consultation with the FASB and with input from stakeholders. On the basis of agreed-upon decision-making criteria, the PCC will conduct a review of existing U.S. GAAP and identify standards that it will consider for possible exceptions or modifications. Proposed modifications or exceptions to U.S. GAAP approved by the PCC will be provided to the FASB for a decision on endorsement.
  • PCC role in projects on the FASB agenda  For projects under active consideration on the FASB’s technical agenda, the PCC is the primary advisory body to the FASB about the implications for private companies. Recommendations of the PCC will be considered by the FASB in its deliberations, and the FASB will be responsible for documenting, in the basis for conclusions of its proposed and final Accounting Standards Updates, how it separately considered the needs of private companies and the recommendations from the PCC.
  • Oversight  The FAF Board of Trustees will create a special-purpose committee of Trustees, the Private Company Review Committee (Review Committee), which will have primary oversight responsibilities for the PCC for its first three years of operation. The Review Committee will hold both the PCC and the FASB accountable for achieving the objective of ensuring adequate consideration of private company issues in the standard-setting process.
  • FAF Trustees’ three-year assessment  After its first three years of operation, the FAF Trustees will conduct an overall assessment of the PCC to determine whether its mission is being met and whether further changes to the standard-setting process for private companies is warranted.

Click for access to the full report on the FASB's Web site.

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