Spring 2014 issue of Horizons

Private Company Standards Improvement Council (PCSIC)

Finally, RubinBrown expressed appreciation to the FAF for its continued efforts in finding an effective solution to this long-standing topic.

After considerable study on the issue, in October 2011, the FAF issued its proposal to establish a Private Company Standards Improvement Council (PCSIC) to improve the standard-setting process for private companies. As proposed, the PCSIC would work jointly with the FASB, to develop criteria for determining whether and when exceptions or modifications to GAAP are warranted for private companies. Any proposed changes to existing GAAP would be subject to ratification by the FASB and undergo thorough due process, including public comment. As thought leaders in the accounting profession, RubinBrown was honored to be invited to participate in a prestigious roundtable event with the FAF held on the campus of Stanford University regarding the FAF proposal. Given, one, the marginal results of past solutions, and two, the advisory, nonauthoritative nature of the proposed PCSIC, RubinBrown continued to support the Blue Ribbon Panel’s recommendation for a separate, authoritative standard setting body, under the FAF but not accountable to the FASB, for the promulgation of accounting and financial reporting standards for private companies. Additionally, RubinBrown expressed concern over the proposal’s requirement that the chair of the PCSIC be a FASB Board Member and proposed that FASB’s action on PCSIC recommendations be changed from one of ratification of PCSIC recommendations regarding private company accounting standards to one of a super-majority veto to reject the recommendations.

Private Company Council (PCC) After extensive outreach on its proposal to establish the PCSIC, the FAF issued its Final Report in May 2012. Rather than being referred to as the PCSIC, the FAF established a new body named the Private Company Council (PCC) which is responsible for determining whether exceptions or modifications to existing nongovernmental GAAP are necessary to address the needs of users of private company financial statements. The private company plan approved by the FAF generally followed the original outline proposed by the FAF Trustees but did include a change which stipulated that the PCC Chair shall not be a FASB member. Consistent with the original FAF proposal, the FASB must endorse PCC proposals in order for them to be incorporated into GAAP. Subsequent to the FAF’s establishment of the PCC, the AICPA declared its support for the FAF’s decision. The AICPA also announced plans to develop another comprehensive basis of accounting to meet the needs of some privately held small- and medium-sized enterprises (SMEs). Financial Reporting Framework for Small- and Medium-Sized Entities (FRF for SMEs) During 2013, the AICPA released the Financial Reporting Framework for Small-and Medium- Sized Entities (FRF for SMEs) to help the small business community with its financial reporting needs. The FRF for SMEs represents a new accounting option for preparing financial statements for privately-held, owner-

2010

2011

2012

2013

2014

Private Company Standards Improvement Council (PCSIC) proposed

Private Company Council (PCC) established after name change from PCSIC

AICPA released FRF for SMEs

FASB issues ASUs on goodwill, certain interest rate swaps and certain common control leasing arrangements

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