Assessment of the FASB's Private Company Council

  • FAF (US Financial Accounting Foundation) (lt blue) Image

27 Feb 2015

The US Financial Accounting Foundation (FAF) has issued a request for comment asking stakeholders for their assessment of the Private Company Council's (PCC) effectiveness and accomplishments as well as it's future role in setting standards for private companies.

While the IASB issued the IFRS for SMEs in July 2009, a set of international accounting requirements developed specifically for small and medium-sized entities (SMEs) prepared on IFRS foundations but a stand-alone product separate from the full set of International Financial Reporting Standards (IFRSs), the FAF went down a different road: After a long consultative process, which also included the question whether the IFRS for SMEs might be an appropriate solution for granting US private companies relief from listed company requirements under US GAAP, the FAF announced in May 2012 that a new body would be established to determine whether exceptions or modifications to existing US GAAP are necessary to address the needs of users of private company financial statements.

The PCC has two responsibilities:

  • It determines whether alternatives to existing US GAAP are necessary for private companies.
  • It serves as an advisory body to the FASB for private company aspects of projects on the FASB's active technical agenda.

While at first there were calls for creating a separate standard-setting board for private companies overseen by the FAF (an approach that was not chosen because of the danger of establishing two separate sets of US accounting standards), the impression has been lately that the PCC, even though working under the FASB, has not only been successful in developing alternatives for private companies, it has also proved to be a catalyst for the FASB's simplification efforts aimed at all companies – public and private. The FAF Chairman states: "The PCC has made significant progress in addressing issues that are important to private companies and the wider financial reporting community."

Please click for access to the press release and the request for comment on the FASB website. Comments are requested by 11 May 2015.

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