15 April 2013

FASB seeks public comments on private company decision-making framework

The FASB, along with the PCC, 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 by June 21, 2013.

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. GAAP.

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 US GAAP for recognition or measurement guidance that it deems appropriate, without having to apply all the alternatives within US GAAP for recognition and measurement. 

“Many private companies issue financial statements in accordance with US GAAP for the benefit of their investors and lenders”, said FASB Chairman Leslie F Seidman. “This proposed guide is intended to help the FASB and the PCC identify the unique needs of users of private company statements, while also reducing the complexity and cost of preparing those statements. Stakeholders have already provided valuable input in the development of the guide, and we look forward to receiving additional feedback about its appropriateness, completeness, and cost effectiveness.”

Press release

Invitation to Comment

© FASB