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State Board Report

July 2013

Participants at NASBA’s June 2013 Regional Meetings heard Private Company Council Chairman Billy Atkinson in New Orleans, on June 5, and PCC Member Diane M. Rubin in Chicago, on June 25, announce roundtable discussions will be held across the nation to gather input on financial reporting standards the PCC should consider modifying to suit private companies’ needs. The first of these roundtables is scheduled for November 4, 2013 at The Ohio State University in Columbus, with three others to be held at college campuses in different parts of the country. “All our standard setting is being done in a public setting, with an emphasis on the diligence of the process,” PCC Chairman Atkinson said. “Our mission is to change the culture of standard setters to think of the implications for private companies whenever a decision is made.”

On June 10, the Financial Accounting Standards Board endorsed the first three alternatives within Generally Accepted Accounting Principles proposed by the PCC: (1) derived from PCC Issue No. 13-01 Accounting for Identifiable Intangible Assets in a Business Combination, (2) derived from PCC Issue No. 13-01B Accounting for Goodwill Subsequent to a Business Combination, and (3) derived from PCC Issue No. 13-03 Accounting for Certain Receive-Variable, Pay-Fixed Interest Rate Swaps. Exposure drafts for public comment were released on July 1 and stakeholders are being asked to let the FASB know by August 23 if they believe these changes will improve financial reporting for private companies. While the exposure period for the proposed changes is in progress, the FASB has requested staff to conduct additional research to assess the applicability of the proposals derived from PC Issue Nos. 13-01 and 13-01B to assess the applicability of these proposals to public companies and not-for-profit organizations.

“My concern is getting good input,” PCC Chairman Atkinson told the NASBA Western Regional Meeting. “There is a lot of angst out there that we will be dealing with, so send us a short e-mail with your issues,” he told the Boards. Ms. Rubin remarked that the PCC had held its first meeting on December 6, 2012 and had “hit the ground running.” Subsequent meetings were held in February and May, with their fourth meeting coming in July. The PCC is looking at prior pronouncements, current FASB projects and the Emerging Issues Task Force’s projects. Ms. Rubin reported that all the members of the FASB are attending every PCC meeting.

FAF President and CEO Terri Polley wrote in her monthly memo that she believes the FASB and PCC are making “important strides” in addressing alternatives that will enable private companies to comply with GAAP. She also stated: “Contrary to what you may have heard, neither the FAF nor the FASB to date has taken a position on the substance of the AICPA’s special purpose framework. However, we have expressed our concern about the possibility that some may confuse the framework with GAAP…Because of this concern, we will continue to monitor developments in this area…”

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