FASB Releases Plan on Financial Reporting Adjustments for Private Companies —JofA

Recommendation Framework Paper Available; Comment Period Ends October 31st.      

Late last month the FASB released its initial staff recommendations on whether and when it will be appropriate to adjust financial reporting requirements for private companies, the Journal of Accountancy reports. 

The recommendations are contained in a paper, Private Company Decision-Making Framework: A Framework for Evaluating Financial Accounting and Reporting Guidance for Private Companies. FASB on Tuesday invited stakeholders to comment on the recommendations.

In May, the Financial Accounting Foundation (FAF), FASB’s parent organization, created the Private Company Council (PCC).   The new council will identify, deliberate, and vote on proposed changes, which will be subject to endorsement by FASB.  More:

The paper gives substantial guidance to help define the cost/benefit analysis and provides a flowchart illustrating the framework to decide whether to permit exceptions or modifications in disclosures for private companies.

In addition, the staff paper recommends that:

• In some circumstances, FASB and the PCC may conclude that private companies should be provided exceptions from applying the same display requirements as public companies, or shouldapply a modified display requirement.
• Generally, the amendments in an Accounting Standards Update (ASU) should be effective for private companies one year after the first annual period for which public companies must adopt them. Exceptions could be made to this principle, though.
• If public companies are required to apply the full method or limited method of retrospective transition when an ASU is issued, FASB and the PCC should consider whether the same method of retrospective transition is appropriate for private companies.

The comment period ends Oct. 31.

 

FASB Framework Paper Open For Comment Through October 31st