FIN 48 among first priorities for new Private Company Council chair

BY KEN TYSIAC
September 19, 2012

The standard known as FIN 48 will be among the first issues the newly formed Private Company Council (PCC) discusses, Billy Atkinson said Wednesday after being named the council’s chairman.

Atkinson said FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, has been a concern for private company representatives. He said FIN 48, codified in ASC Topic 740, Income Taxes, received a “mixed review” in the Financial Accounting Foundation (FAF) post-implementation review of an accounting standard. FAF is FASB’s parent organization.

The PCC, whose members and chairman were announced Wednesday by the FAF, will propose modifications to U.S. GAAP for private companies. In addition to FIN 48, Atkinson suggested the council would turn its attention early on to:

  • Fair value.
  • Variable interest entity consolidation, or FIN 46(R).
  • Complexity of derivatives, including simple interest rate swaps used to convert floating rate debt to fixed.
  • Accounting for warrants as liabilities.
  • Elements of business combination accounting such as separately identified intangible assets.


“Those are what I would refer to as ‘low-hanging fruit’ that I think there’s an expectation that we’d begin to project ourselves into,” Atkinson said during a telephone conference with reporters. “It’s my expectation…and those of the stakeholders that we begin to show some progress quickly.”

First, though, the PCC will work with FASB to continue development of a framework for making decisions about whether and when U.S. GAAP should be modified for private companies. FASB has issued an Invitation to Comment on framework recommendations that were proposed by FASB’s staff but haven’t been deliberated by the board.

Atkinson chaired the National Association of State Boards of Accountancy from 2009 to 2010. He retired from practice after working for 39 years as an audit and risk management partner in PwC’s private company services unit. He also was a member of the Blue Ribbon Panel on standard setting for private companies.

“We support the FAF's efforts to create a PCC dedicated to advocating for appropriate differences in GAAP for private companies,” AICPA President and CEO Barry Melancon said in a statement. “Its ability to achieve that end will be judged only when it begins issuing specific proposals that are adopted. We know many of the appointed members of the PCC have supported the need for differential standards. We note that the appointed Chair has in the past publicly expressed strong reservations about appropriate significant differences in GAAP for private companies. Since the job of the PCC is to advocate for those differences, we can only assume that during the interview process the FAF reached a point of comfort that Mr. Atkinson now supports meaningful differences. I've known Billy for a long time. He is a competent, passionate professional who has worked hard for the CPA profession during his career. We expect that his commitment to differential standards has evolved and that his actions and those of his council will in fact fulfill the FAF's commitment to at long last address this issue.”

FAF received more than 100 nominations for the PCC.

Joining Atkinson on the council are:

  • George Beckwith, vice president and CFO of National Gypsum Company in Charlotte, N.C.
  • Steven Brown, vice president of US Bank in Portland, Ore.
  • Jeffery Bryan, partner, professional standards group of Dixon Hughes Goodman LLP in High Point, N.C.
  • Mark Ellis, CFO of PetCareRx Inc. in Chappaqua, N.Y.
  • Thomas Groskopf, director and owner of Barnes, Dennig & Co., Ltd., in Cincinnati.
  • Neville Grusd, president of Merchant Financial Corp. in New York.
  • Carleton Olmanson, managing principal of GMB Mezzanine Capital in Minneapolis.
  • Diane Rubin, partner of Novogradac & Co. LLP in San Francisco.
  • Lawrence Weinstock, vice president for finance of Mana Products Inc., in Long Island City, N.Y.


FAF President and CEO Terri Polley said the diverse backgrounds and perspectives of the council members will help them provide valuable insights and leadership. The council includes three users of financial statements, three preparers and four members who are auditors or CPA practitioners.

“Each of the newly appointed members, they’re very enthusiastic about the effort,” said. “They certainly appreciate independent standard setting. We know they are committed to well-informed decision making for the users of private company financial statements, and they seek to create greater clarity in terms of financial reporting for private companies.

The PCC is scheduled to meet for the first time in the fourth quarter, and will meet at least five times a year. The council will identify, deliberate, and vote on proposed exceptions and modifications to existing U.S. GAAP for private companies. In addition, the PCC will be FASB’s primary adviser on private company issues during the development of new standards.

Exceptions and modifications proposed by the PCC will be subject to ratification by a simple majority of FASB members. Because the PCC will work with a FASB liaison, it is anticipated that failure to ratify will be rare. FASB member Daryl Buck will serve as FASB’s liaison to the PCC.

“We must have a consistent air of mutual respect and work very diligently on the issues at hand as they come along, beginning with this decision framework and then certainly as we dig into some of the more detailed aspects of standards themselves,” Atkinson said.

If FASB fails to endorse PCC recommendations, the board must provide written notice and recommend changes that could lead to endorsement.

Ken Tysiac ( ktysiac@aicpa.org ) is a JofA senior editor.

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