The Financial Accounting Foundation created the PCC in 2012 in response to feedback from private company accounting personnel who were overwhelmed in their efforts to comply with rules that appeared to be made to keep investors informed on the complicated financials of public companies that had little in common with the GAAP statements that small private companies submitted to their banks in an effort to secure financing. The comment period was still open when this issue of the JofA went to press.
In December, the PCC proposed extending to not- for- profits the private company alternatives on accounting for goodwill and accounting for identifiable intangible assets in a business combination (see "News Digest: FASB Proposes Extending 2 GAAP Alternatives to Not- for- Profits," page 8). 2014- 18, Business Combinations (Topic 805): Accounting for Identifiable Intangible Assets in a Business Combination.Įach alternative may offer substantial relief and cost savings for private companies as they perform their accounting.
2014- 07, Consolidation (Topic 810): Applying Variable Interest Entities Guidance to Common Control Leasing Arrangements. 2014- 03, Derivatives and Hedging (Topic 815): Accounting for Certain Receive-Variable, Pay-Fixed Interest Rate Swaps - Simplified Hedge Accounting Approach. 2014- 02, Intangibles - Goodwill and Other (Topic 350): Accounting for Goodwill. In 2016, following the PCC's initiative, FASB eliminated the effective dates for the four private company GAAP alternatives, providing the opportunity for private companies to adopt these four alternatives at any time. The good news is that even though the four private company GAAP alternatives that have been created were issued in 2014, it's not too late to take advantage of the opportunities they provide to simplify private company accounting.
Implementation of new standards on revenue recognition and lease accounting has provided GAAP users with plenty to do over the past few years in addition to their regular workload. It would be understandable if leaders of some private companies have not had the time to consider adopting the private company GAAP alternatives created by FASB's Private Company Council (PCC).
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