The Private Company Council (PCC) will continue exploring potential alternatives to financial reporting standards for private companies and will expand its advisory role on standards FASB is developing, according to a report released by the Financial Accounting Foundation (FAF).
The continued exploration of potential private company alternatives could be interpreted as a shift in direction from the FAF proposal in February that called for a continued transition for the PCC into a body that primarily provides input on FASB agenda projects. FAF asked for comment on whether the "look-back" phase of considering possible GAAP alternatives for private companies was complete or nearly complete.
Some comment letter writers—including the AICPA—wrote that the PCC's work on private company alternatives was not close to being finished. AICPA President and CEO Barry Melancon, CPA, CGMA, and then-AICPA board Chair Tommye E. Barie, CPA, wrote a May 8 letter to the FAF trustees.
"Consistent with how the PCC was established, FASB and PCC must be partners in deciding when differences in GAAP are appropriate," Melancon and Barie wrote. "The PCC cannot become merely an advisory body to FASB."
A review report on the PCC released by FAF—which is FASB's parent body—confirmed that the work on alternatives should continue. The report also described various mechanisms through which the PCC will assist FASB in developing its standards.
"Part of the goal is to work more collaboratively on the front end with the FASB," Candace Wright, who will replace Billy Atkinson as the PCC chair this month, said in a telephone interview.
The report is the result of a formal, three-year review that was mandated when FAF created the PCC in 2012. The PCC has created four GAAP alternatives for private companies, addressing accounting for intangible assets in a business combination; applying variable-interest entity guidance to common-control leasing arrangements; accounting for goodwill; and creation of a simplified hedge accounting approach to accounting for certain interest-rate swaps.