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Definition of a nonpublic entity

The objective of this completed project was to reexamine the definition of a nonpublic entity and public entity. The project focused on (1) defining what constitutes a private company (nonpublic business entity) to distinguish between different types of entities for standard-setting purposes and (2) determining which companies would be included in the scope of the Private Company Decision-Making Framework (PCDMF). The project also focused on what constituted a nonpublic not-for-profit entity. An Accounting Standards Update (ASU) was issued on December 23, 2013, completing the project.

 

Meeting minutes

FASB Board discussions regarding this project are found in the following meeting minutes:

  • October 30, 2013 — The Board discussed feedback received on its proposed ASU, Definition of a Public Business Entity: An Amendment to the Master Glossary.
  • July 10, 2013 — The Board decided to issue an exposure draft of a proposal that would amend the Codification Master Glossary to include the definition of a public business entity that would apply prospectively to new accounting and reporting standards.
  • June 6, 2013 — The Board met to discuss issues relating to the development of an exposure draft addressing the definition of a nonpublic entity. In particular, it was decided that a public or nonpublic distinction should not be made among not-for-profit entities for financial reporting purposes.
  • December 6, 2012 (Private Company Council meeting) — The PCC and FASB discussed various issues related to the transition from the Private Company Financial Reporting Committee, agenda direction for look-back projects, the PCDMF, and the definition of a nonpublic entity, as well as discussions on  the FASB's going concern and revenue recognition projects.
  • June 6, 2012 — The Board decided that a company that otherwise meets the characteristics of a private company would be deemed a private company for financial reporting purposes if (1) it is a consolidated subsidiary of an entity that is a public company or (2) one of its controlled and consolidated subsidiaries is a public company; and that an employee benefit plan would not be deemed a private company for financial reporting purposes
  • May 2, 2012 — The Board decided that a for-profit entity that is a conduit bond obligor for conduit debt securities that are traded in a public market would not be deemed a private company for standard-setting purposes even if the entity otherwise meets the characteristics of a private company as defined in this project.
  • April 25, 2012 — In addressing the definition of a private entity, the Board decided not to include entities that are required to file financial statements with the SEC for purposes of issuing securities to be traded in a public market, and that privately held financial institutions should be included in such definition.
  • March 7, 2012 — Agenda decision.

 

Project milestones

DateDevelopmentComments
July 31, 2012 FASB issues staff paper, Private Company Decision-Making Framework: A Framework for Evaluating Financial Accounting and Reporting Guidance for Private Companies. Comment deadline November 9, 2012.
April 15, 2013 Private Company Council issues an Invitation to Comment, Private Company Decision-Making Framework: A Guide for Evaluating Financial Accounting and Reporting for Private Companies. Comment deadline June 21, 2013.
August 7, 2013 Proposed ASU, Definition of a Public Business Entity: An Amendment to the Master Glossary. Comment deadline September 20, 2013.
December 23, 2013 FASB Accounting Standards Update No. 2013-12, Definition of a Public Business Entity: An Addition to the Master Glossary. Project completed.

Correction list for hyphenation

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