FASB’s Private Company Council recently released a proposed change to the definitions of public business entity, which could impact your not-for-profit.
In the most recent in Focus released by FASB, an amendment to the definition of public business entity was proposed. The proposal would define a public business entity as:
- An entity that files with the SEC.
- An entity that is required to file with a regulatory agency under the Securities Exchange act of 1934 or if filing for the purpose of issuing securities
- The entity has unrestricted securities that are traded or can be traded on an exchange or an over-the-counter-market. Or the entity is a conduit bond obligor.
- Its securities are unrestricted, and it is required to provide U.S. GAAP financial statements to be made publicly available on a periodic basis because of legal or regulatory requirement.
The proposed accounting treatment would exclude most Not-for-Profit entities from the definition of a public business entity. The proposal’s purpose is to increase consistency across the board in how public entities are defined. However, under the new definition, not-for-profit entities that have outstanding public bonds would be required to file under the standards of a public entity, which would differ from previous standards. FASB is currently receiving comments on the proposed definition change through September 20, 2013.
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