Private Company Council Holds Inaugural Meeting, Identifies Four Areas for Study

pan>)--At its inaugural meeting today, the Private Company Council (PCC), a new
body created to improve the standard-setting process for private
companies, identified four areas to research for agenda consideration.
The areas involve consolidation of variable interest entities;
accounting for plain vanilla interest rate swaps; accounting for
uncertain tax positions; and recognizing and measuring, at fair value,
various intangible assets (other than goodwill) acquired in business
combinations.
“We are eager to review the research, and we look
forward to discussing the issues in more detail at our next meeting in
February. After we discuss these issues further, well make a decision
about which projects to add to the PCC agenda.”
These four areas are often top of mind for users, preparers, and
auditors of private company financial statements, said PCC Chairman
Billy M. Atkinson. We are eager to review the research, and we look
forward to discussing the issues in more detail at our next meeting in
February. After we discuss these issues further, well make a decision
about which projects to add to the PCC agenda.
The PCC was established in May by the Board of Trustees of the Financial
Accounting Foundation (FAF) to work with the Financial Accounting
Standards Board (FASB) to determine whether and when to modify U.S.
Generally Accepted Accounting Principles (GAAP) for private companies.
During the PCCs first meeting, FASB staff members presented to the PCC
issues identified as being of concern by constituents providing written
input to the Blue-Ribbon Panel on Standard Setting for Private Companies
in 2010, and by participants in private company roundtables held in 2010
and 2011. The PCC directed the FASB staff to develop agenda research
memoranda on:
Accounting Standards Codification (ASC) Topic 810, Consolidation
(formerly FIN 46(R) and FAS 167), which involves financial
reporting by companies involved with variable interest entities
(organizations in which the investor holds a controlling interest that
is not based on the majority of voting rights).
Accounting for plain vanilla interest rate swaps, which are
used to convert variable interest rates on loans to fixed interest
rates, and vice versa, as referenced in ASC Topic 815, Derivatives and
Hedging (formerly FAS 133).
ASC Topic 740, Income Taxes (formerly FIN 48), which is
intended to increase relevance and comparability in reporting
information about uncertain tax positions.
Recognizing and measuring various intangible assets (other than
goodwill) acquired in business combinations, including providing
Level 3 fair value measurements and disclosures associated with them,
as referenced in ASC Topic 805, Business Combinations and
ASCTopic 350, Intangibles-Goodwill and Other (formerly FAS 141(R)
and FAS 142).
The following items were also addressed during the inaugural meeting:
The official transition from the Private
Company Financial Reporting Committee (PCFRC),
including a report which summarizes recent PCFRC activities, lessons
learned, and suggestions on FASB projects that the PCC may want to
monitor
An update on the FASBs private company decision-making framework Invitation
to Comment, including a summary of outreach and feedback
An update on the FASBs project on the definition
of a nonpublic entity, including a summary of outreach and feedback
A discussion on the current FASB project on going
concern.
We are very pleased to see the PCC off and runningtackling the
critical financial reporting issues facing private companies, said FAF
President and CEO Teresa S. Polley. This Council represents a critical
milestone along our journey to improve financial reporting for private
companies, and today is the first step in our journey. 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.
All PCC meetings will be archived on the FAF
website. The meeting handouts for the inaugural meeting can be found here.
For more information on the PCC, please visit the FAF
website or read the Establishment
of the Private Company Council Final Report.
About the Financial Accounting Foundation
The FAF is responsible for the oversight, administration, and finances
of both the Financial Accounting Standards Board (FASB) and its
counterpart for state and local government, the Governmental Accounting
Standards Board (GASB). The Foundation is also responsible for selecting
the members of both Boards and their respective Advisory Councils.
About the Financial Accounting Standards Board
Since 1973, the Financial Accounting Standards Board has been the
designated organization in the private sector for establishing standards
of financial accounting and reporting. Those standards govern the
preparation of financial reports and are officially recognized as
authoritative by the Securities and Exchange Commission and the American
Institute of Certified Public Accountants. Such standards are essential
to the efficient functioning of the economy because investors,
creditors, auditors, and others rely on credible, transparent, and
comparable financial information. For more information about the FASB,
visit our website at www.fasb.org.

Information Source: Business Wire