The Not-for-Profit Advisory Committee (NAC) held meetings on September 6 and 7, 2012, where it discussed a variety of topics including, standard-setting developments, the current status of FASB and other projects, as well as recent trends.
One of the primary topics discussed at the meetings was what constitutes a nonpublic entity. This distinction is important because it will determine which entities are to be included in the scope of the private company decision-making framework (a project currently being undertaken by the Private Company Council). The definition is also important to the FASB when it’s considering whether certain entities should be eligible to apply differential accounting and reporting guidance.
The FASB has tentatively decided that an entity is not a private company if it:
• Files or furnishes financial statements with a regulatory agency for purposes of issuing securities in a public market or issuing securities that trade in a public market;
• Is a for-profit conduit bond obligor for conduit debt securities that are traded in a public market; or
• Is an employee benefit plan.
The NAC also discussed at the meeting whether there is merit to having a distinction between not-for-profit organizations. If so, how would the distinction be determined. Some have suggested that a distinction is necessary due to many different types of not-for-profit organizations, while others of questioned the need for a distinction due to potential loss of comparability. Some guidelines to distinguish not-for-profit organizations from one another included public accountability, conduit bond obligors, public donations and size.
© 2012 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.
This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.