Annual Update for Accountants and Auditors: 2020

Chapter 4Private Company Financial Reporting

Learning objectives

• Recall the history of the formation of the Private Company Council (PCC).
• Identify the objectives and working plan of the PCC.
• Determine the updates issued by FASB at the recommendation of the PCC.

Introduction

The Financial Accounting Foundation (FAF) has recognized the need for improvements in financial reporting for private companies and has taken steps to introduce standards exclusively for private companies. The FAF has taken a supplemental approach by providing options for private companies for accounting treatment in generally accepted accounting principles (GAAP) for certain accounting issues.

Private Company Council

Introduction

The FAF established the PCC on May 30, 2012, to address the concerns of constituents related to the development of financial reporting standards for private companies in the United States. Though the PCC is not the autonomous standard-setting body that many requested, it is the most significant step taken by the FAF related to standards specifically for private companies.

Predecessors to the PCC

Private Company Financial Reporting Committee

The FAF and AICPA jointly formed the Private Company Financial Reporting Committee (PCFRC) in June 2006; Judy O’Dell was the first chair. This committee’s objective was to monitor FASB projects and make recommendations regarding the impact, if any, new standards could have on private companies and to propose different standards when ...