State Board Report

July 2012

Both Financial Accounting Foundation Chair John J. Brennan and FAF President Teresa S. Polley expressed their appreciation to NASBA for the relationship that has developed between the two organizations. Chair Brennan told the Eastern Regional Meeting, "We thank NASBA for being great partners with the FAF – constructive, supportive and being great friends. It is important to have partners who give us good constructive feedback. This is the best relationship we have with an organization – and we are very grateful." Ms. Polley quipped at the Western Regional Meeting, "If we could work with all our stakeholder groups like we do with NASBA, we could move on to working on world peace."

The FAF leaders explained how the new Public Company Council came to be. Chair Brennan said, "Let's stop talking and start doing – wrestle the issue to the ground." He said challenges the private companies are facing include globalization, comparability, complexity and user needs. The FAF learned from the Private Company Financial Reporting Committee, which it formed in 2006, that the FASB has to engage in the work of private company standards setting. The new PCC will have 9-12 members, representing a broad spectrum of interests. The FASB members will be expected to be at all the PCC's meetings, but the PCC's chair will not be a member of the FASB.

The PCC will have two key responsibilities, President Polley stated:

  1. Based on criteria agreed on with FASB, PCC indentifies, deliberates and votes on proposed modifications to existing U.S. GAAP for private companies.
  2. The PCC is the primary advisory body to FASB on private companies for active technical agenda issues.

Nominations for PCC members were due by the end of June. Ms. Polley said about 85 nominations were anticipated for these uncompensated posts. The FAF expects to appoint the new chair around August 20 and to have completed member selection in September. The first meeting of the PCC is to be held by the end of the year.

The FASB staff is currently working on a decision-making framework for private companies that is to be released as an exposure draft in either July or August. Staff is also working on developing a definition of a "nonpublic entity."

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