State Board Report
Private Company Council Chairman Billy M. Atkinson called to order the inaugural meeting of the Financial Accounting Standards Board’s new advisory group on December 6, 2012 in Norwalk, CT. Created to improve the standard-setting process for private companies, the PCC will initially be focusing their attention on: consolidation of variable interest entities (Accounting Standards Codification Topic 810); accounting for “plain vanilla” interest rate swaps (ASC Topic 815); accounting for uncertain tax positions (ASC Topic 740); and recognizing and measuring, at fair value, various intangible assets (other than goodwill) acquired in business combinations (ASC Topic 805 and Topic 350).
Mr. Atkinson, a NASBA Past Chair, announced: “These four areas are often top of mind for users, preparers, and auditors of private company financial statements. We are eager to review the research, and we look forward to discussing the issues in more detail at our next meeting, on February 12th. After we discuss these issues further, we’ll make a decision about which projects to add to the PCC’s agenda.” Their meetings will be archived on www.accountingfoundation.org.
Other PCC members are: George Beckwith, Steve Brown, Jeff Bryan, Mark Ellis, Tom Groskopf, Neville Grusd, Carleton Olmanson, Diane M. Rubin (NASBA Past Chair) and Lawrence E. Weinstock. The FASB member serving as liaison with the PCC is Daryl Buck. The meeting included an official transition from the Private Company Financial Reporting Committee to the PCC, with a report summarizing the PCFRC’s recent activities, lessons learned and suggestions for projects that the PCC might pursue. PCC members Beckwith and Groskopf had previously been members of the PCFRC.
Updates on the FASB’s projects discussed at the December 6 meeting included the Board’s invitation to comment on “Private Company Decision-Making Framework – A Framework for Evaluating Financial Accounting and Reporting Guidance for Private Companies.” The comment period ended on November 9, 2012 and 57 comments were received. The Framework had been developed by the FASB staff based on comments gathered from stakeholders over two years. Staff had identified six key differences between private and public companies: 1- types and number of financial statement users; 2- access to management; 3- investment strategies; 4- ownership and capital structures; 5- accounting resources; and 6- learning about new financial reporting guidance. Respondents were asked if they agreed that the six differential items were appropriate.
The staff reported that, “Overall, respondents agreed with the six differential factors.” Virtually all of the respondents agreed with “ownership and capital structures” and “investment strategies.” Thirty-seven respondents agreed with “types and number of financial statement users” and 35 agreed with “learning about new financial reporting guidance.”
FASB President and CEO Teresa S. Polley told the meeting, “We are confident that the spirit of cooperation between the PCC and the FASB will carry us through and, more importantly, result in significant progress.”
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