Private Company Advocacy Group Seeks Additional Revenue Standard Guidance
As private companies prepare to comply next year with the Financial Accounting Standards Board’s (“FASB”) revenue recognition standard, the American Institute of Certified Public Accountants’ Private Companies Practice Section (“PCPS”) seeks relief from the accounting changes. In its January 17 letter to the FASB, the PCPS requested permission for private companies to use less constricting interpretations for certain aspects of FASB Accounting Standards Codification 606, Revenue From Contracts With Customers. The PCPS believes the FASB’s landmark standard impacts private companies by requiring strong consideration of recognition and measurement disparities and disclosure differences for specific conduit debt obligors. Accordingly, the PCPS. Read More.
FASB Continues Discussions on Disclosure Framework Project
During a discussion at last Wednesday’s meeting, the Financial Accounting Standards Board (“FASB”) made the following decisions on proposed FASB Concepts Statement, Conceptual Framework for Financial Reporting—Chapter 8, Notes to Financial Statements: Nonprofits and private companies must be retained on the notes to financial statements. A discussion on the possible negative consequences of disclosures will be included. The disclosure of changes in line items not easily understood will be considered. The disclosure of alternative measures clearly useful in reviewing prospects for future cash flows will be considered. No disclosure objectives were established without giving specific requirements on how those objectives. Read More.
AICPA Group Seeks Academic Research on Audit Work of Private Companies
The American Institute of Certified Public Accountants’ (“AICPA”) Assurance Research Advisory Group (“ARAG”) is seeking proposals for academic research on the auditing process. Announced by the ARAG on June 1, the research will be used to help the AICPA’s standard-setting efforts for private businesses and the Enhancing Audit Quality initiative. Proposals are due Tuesday, October 6. Grants funding academic research efforts will be announced before February 28, 2018.
Private Company Council, FASB Members Meet to Discuss Projects
Private Company Council (“PCC”) members gathered Tuesday to discuss the Financial Accounting Standards Board’s (“FASB”) ongoing projects. With FASB staff members also on hand to provide updates, the PCC provided feedback on the following matters: Financial instruments—hedge accounting. During talks on the FASB’s effort to simplify hedge accounting, the PCC asked the FASB to make a decision on whether to offer an exception for private companies when fulfilling their hedge documentation and effectiveness testing requirements. Consolidation reorganization and improvements. Several PCC members still want private companies under common control to be exempt from the variable interest entity guidance under Topic. Read More.
Topics: Consolidation (Topic 810), F, Financial Accounting Standards Board "FASB", Hedge Accounting, PCC Decision Making Framework Guide, Private companies, Private Company Council "PCC", Variable Interest Entity "VIE"
Debt Classification Accounting Guidance Proposal Coming
On Wednesday, the Financial Accounting Standards Board (“FASB”) unanimously voted to issue a proposal that would help companies distinguish between debts that are due much sooner and debts that do not require payments for at least a year. The FASB agreed to move its debt classification guidance proposal forward despite criticism from its Private Company Council and the AICPA’s Private Companies Practice Section Technical Issues Committee. Members of both organizations said the proposed changes will increase a company’s number of debts classified as “current”, thus putting their creditworthiness at risk. In addition, some private companies have previously argued that the amendments. Read More.
Private Company Accounting Alternatives Removed
Impacting the use of private company accounting alternatives, the Financial Accounting Standards Board has issued Accounting Standards Update (ASU) No. 2016-03 . The ASU eliminates the effective dates for the following alternatives: ASU No. 2014-02, Intangibles—Goodwill and Other (Topic 350). ASU No. 2014-03, Derivatives and Hedging (Topic 815). ASU No. 2014-07, Consolidation (Topic 810): Applying Variable Interest Entities Guidance to Common Control Leasing Arrangements. ASU No. 2014-18, Business Combinations (Topic 805): Accounting for Identifiable Intangible Assets in a Business Combination. ASU No. 2016-03 also waives the preferability assessment for the first time a private entity applies a private company accounting alternative. The amendments in ASU No. 2016-03 are effective immediately.
Topics: accounting alternatives, Accounting Standards Update "ASU", Business Combinations (Topic 805), Consolidation (Topic 810), Derivatives and Hedging (Topic 815), Intangibles (Topic 350), preferability assessment, Private companies