The FASB, along with the Private Company Council (PCC), has issued an Invitation to Comment: Private Company Decision-Making Framework: A Guide for Evaluating Financial Accounting and Reporting for Private Companies, seeking stakeholder input on the proposed private company decision-making framework. The framework is intended to serve as a guide for the FASB and the PCC in determining whether and in what circumstances to provide alternative recognition, measurement, disclosure, display, effective date, or transition guidance for private companies reporting under U.S. generally accepted accounting principles (GAAP). Comments on the proposed framework are due June 21, 2013.
The FASB and the PCC developed the proposed provisions contained in the Invitation to Comment based on their discussions at the PCC’s February 2013 meeting. During that meeting, the FASB and the PCC deliberated stakeholder feedback on the FASB’s July 2012 Invitation to Comment, which contained initial FASB staff recommendations about the creation of a private company decision-making framework. As a result of their February discussions, the FASB and the PCC made changes to that original proposal, including:
- Removing the industry-specific presumption by having the Board and the PCC consider whether the same industry-specific guidance is relevant to users of the financial statements of both public companies and private companies; and
- Allowing a private company to select the alternatives within U.S. GAAP for recognition or measurement guidance that it deems appropriate, without having to apply all the alternatives within U.S. GAAP for recognition and measurement.
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