FASB Releases Discussion Paper on Private Company Decision-Making Framework

Published on: 02 Aug 2012

This week, the FASB staff released a discussion paper1 (DP) outlining proposed criteria for deciding whether modifications or exceptions to U.S. GAAP are warranted for private companies. The criteria would be used by the FASB and the Private Company Council2 (PCC) as part of a decision-making framework for evaluating financial accounting and reporting guidance for private companies.

The proposed framework reflects feedback the FASB staff received from stakeholders regarding (1) differences between the needs of users of private company and public company financial statements and (2) cost-benefit considerations for private company and public company financial reporting. Stakeholders were asked to provide comments on six factors the staff identified as distinguishing the two types of reporting: (1) types and number of financial statement users, (2) user access to company management, (3) private versus public investor investment strategies, (4) company ownership and capital structures, (5) company accounting resources and expertise, and (6) staff accounting and financial reporting learning practices.

The Board has asked stakeholders to submit input on the DP by October 31.

Watch for Deloitte’s upcoming Heads Up on the DP.


[1] The FASB is working on a separate project to develop a formal definition of “nonpublic entity.” It intends to expose a proposed definition for public comment in the near future.

[2] The PCC was formed on May 23, 2012, and is tasked with improving the accounting standard-setting process for private companies. See Deloitte’s June 5, 2012, Heads Up on the establishment of the PCC.

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