By Allison M. Henry, CPA, CGMA, PICPA Vice President - Professional & Technical Standards
Hot off the press! On Jan. 16, 2014, the FASB issued its first ever alternatives to U.S. GAAP for privately held companies. These changes originated through the Financial Accounting Foundation’s newly created Private Company Council
(PCC). The PCC, which was established May 23, 2012, works under the FASB umbrella to propose financial reporting options for nonpublic entities. Proposed changes to U.S. GAAP go through the normal due process, with comments deliberated by the PCC. The FASB reconsiders the revised PCC proposal for potential endorsement. If final endorsement is received, the proposed revisions are issued as Accounting Standards Updates.
The first approved alternatives relate to subsequently measuring goodwill and accounting for “plain vanilla” interest rate swaps. They have been incorporated into the U.S. Accounting Standards Codification
by Accounting Standards Updates 2014-01 and 2014-02. Another proposed alternative relating to applying variable interest entity guidance to common control leasing arrangements is expected to be released soon.
Also, on Dec. 23, 2013, the FASB and PCC issued the final Private Company Decision-Making Framework that will be used to make decisions regarding the need for alternatives to U.S. GAAP for private companies related to recognition, measurement, disclosure, display, effective date, or transition guidance. The definition of public business entity, which will be used to determine the applicability of U.S. GAAP alternatives, was approved on Dec. 23 as well.
Currently, the PCC is deliberating the feedback it received from a proposed alternative relating to recognizing and measuring various intangible assets (other than goodwill) acquired in business combinations, and evaluating whether alternatives are needed for stock-based compensation. Furthermore, based on PCC recommendations, the FASB has issued an exposure document proposing changes in the presentation requirements for all development-stage entities.
If you are interested in keeping up with changes in the A&A standards, consider joining PICPA’s A&A committee. We hold lively quarterly discussions about potential A&A standards changes and related practice issues. Joining is simple. Just click here.