Private Company Financial Reporting

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13 Δεκ 2013 (πριν από 3 χρόνια και 10 μήνες)

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Private Company Financial
Reporting

LITTLE GAAP


15,000 issuers vs. 28.5 million
private companies but GAAP driven
by public company issues.



Small businesses employ more
than half of all private sector workers.



Private companies and their
financial statement users have
information needs different from
public companies.

The Standard Setting Dilemma


UK Accounting
Standards Board
proposing three
-
tier
system of financial
reporting.


Germany has
become first major
country to have two
standard setters.


Canadian
Accounting
Standards Board
decided one size
does not fit all
and published
Accounting
Standards for
Private
Enterprises in
Dec. 2009



Not Just a
US Problem


Council on Accounting
for Unlisted Companies
formed in Japan to
determine if changes
should be made to
standard
-
setting process
for unlisted companies



IFRS for SMEs


being
used in many areas of the
world and being
considered in some
others

Not Just a US Problem


Too many GAAP
-
specific
requirements not useful or relevant
for private companies’ financial
statement users


Greater FASB emphasis on
equity/public company investors


Most important problem: relevance


Increased complexity is
burdensome, time
-
consuming

What U.S. Constituents Say
about
GAAP

for Private
Company Financial Reporting


Private companies
incurring significant
unnecessary cost
for financial
statement
preparation and
audit, review or
compilation
services.


Private
companies are
increasingly
taking
GAAP

exceptions.

What this means for GAAP in Practice Today?


Current system
is not attuned to
the needs of
private company
financial
statement
preparers and
users

Key Events For Standard
-
setting For Private Companies


Private Company Financial Reporting Committee
(
PCFRC
)


In 2006, the FASB created the
PCFRC

in an effort to further improve
its ability to incorporate the views of private company constituents in
its standard
-
setting process.



The mission of the
PCFRC

was to provide recommendations to the
FASB on issues related to standard setting for private companies
and to focus on how standard setting affects day
-
to
-
day technical
activities at private companies.

The FAF Oversight Committee


In 2008 the FAF created the Standard
-
Setting Process Oversight Committee,
which conducts, on behalf of the Board of Trustees, ongoing oversight and evaluation
of the adequacy, transparency, independence, and efficiency of the standard
-
setting
processes employed by the FASB and GASB in establishing and improving financial
accounting and reporting standards.



The Committee does not interfere with technical standard
-
setting.

Key Events For Standard
-
setting For Private Companies

Key Events For Standard
-
setting For Private Companies



FAF

Listening Tour


In 2009 the
FAF

Board of Trustees undertook a nationwide “listening
tour.” During the tour, the Trustees learned that many constituents
continued to be concerned about the
cost

and
complexity
of
standards for private companies and not
-
for
-
profit organizations and
were not satisfied with the results of the collaboration between the
FASB and the
PCFRC
.


A major issue cited by constituents was that the FASB and the
PCFRC

did not develop and agree upon a framework for
considering exceptions or modifications to U.S.
GAAP

for private
companies.

Key Events For Standard
-
setting For Private Companies

Blue
-
Ribbon Panel on Standard
Setting for Private Companies



The FAF Trustees collaborated
with the American Institute of Certified
Public Accountants (AICPA) and the
National Association of State Boards of
Accountancy (NASBA) to create the
Blue
-
Ribbon Panel on Standard Setting
for Private Companies. The panel was
charged with studying the needs of
users of private company financial
statements and making
recommendations to the Trustees about
how the standard setting process can
best meet those needs.

Establishment of the Private Company Council


The Private Company Council (PCC), will be overseen by the
Trustees and will replace the existing Private Company Financial
Reporting Committee (PCFRC).



The PCC will comprise 9 to 12 members, including a Chair. The
PCC Chair will not be affiliated with the FASB and will have had
substantial experience with and exposure to private companies
during the course of their career.




PCC members will include users, preparers, and practitioners who
have significant experience using, preparing, and auditing (and/or
compiling and reviewing) private company financial statements.

Private Company Council




The PCC has two principal responsibilities:


1.
The PCC will determine whether exceptions or modifications to
existing non
-
governmental U.S. Generally Accepted Accounting
Principles (U.S. GAAP) are required to address the needs of users
of private company financial statements.


2.
The PCC will serve as the primary advisory body to the Financial
Accounting Standards Board (FASB) on the appropriate treatment
for private companies for items under active consideration on the
FASB’s technical agenda.

Private Company Council


During its first three years of operation, the PCC will hold at least
five meetings each year, with additional meetings if determined
necessary by the PCC Chair.



A FASB board member will be assigned as a liaison to the PCC,
similar to other FASB group arrangements. FASB technical and
administrative staff will be assigned to support and work closely with
the PCC to leverage the FASB’s resources and avoid duplication of
efforts.



All FASB members will be expected to attend and participate in all


deliberative meetings of the PCC, but closed educational and
administrative meetings may be held with or without FASB members
present.


.

PCC Agenda Setting and Due
Process for existing U.S.
GAAP


The
PCC

will conduct a review of existing
U.S.
GAAP

and identify standards that it will
consider for possible exceptions or
modifications. The
PCC

will develop,
deliberate, and vote on proposed exceptions
or modifications, which must be approved
by a two
-
thirds vote of all
PCC

members
(super majority).


Proposed modifications or exceptions to
U.S.
GAAP

approved by the
PCC

will be
provided to the FASB for a decision on
endorsement. If endorsed by a simple
majority of FASB members, the proposed
modifications will be exposed for public
comment.

PCC Agenda Setting and Due
Process for existing U.S.
GAAP

PCC


Following receipt of public comment, the PCC will consider
changes to the original recommendation and take a final
vote. If approved, the final recommendation then will be
provided to the FASB for a final decision on endorsement.

FASB


If the FASB does not endorse a proposed or final
modification or exception, the FASB Chairman will provide
to the
PCC

Chair, within a reasonable period of time, a
written document describing the reason(s) for the non
-
endorsement.

PCC Role in Projects on FASB Agenda

PCC


For projects under active consideration on the FASB’s technical agenda,
the PCC is the primary advisory body to the FASB about the implications
for private companies.

PCC


The
PCC

may vote to reach a consensus about recommendations to the
FASB for appropriate treatment for private companies on active FASB
projects. Those recommendations will be considered by the FASB in its
deliberations, and the FASB will be responsible for documenting, in the
basis for conclusions of its proposed and final Accounting Standards
Updates, how it separately considered the needs of private companies
and the recommendations from the
PCC
.

PCC Roster

Mr. Billy M. Atkinson


Chair
Mr. Daryl E. Buck


FASB
Liasion

Mr. Michael K. Cheng


FASB Staff

Mr. George
Beckwith
-

National
Gypsum
Company

Mr. Steven
Brown
-

US
Bank

Mr. Jeffery
Bryan
-

Dixon
Hughes
Goodman
LLP

Mr. Mark
Ellis
-

PetCareRx

Inc.

Mr. Thomas
Groskopf

-

Barnes,
Dennig

&
Co., Ltd.

Mr. Neville
Grusd

-

Merchant
Financial
Corporation

Mr. Carleton
Olmanson

-

GMB

Mezzanine
Capital

Ms. Diane
Rubin
-

Novogradac

& Company
LLP

Mr.
Lawrence
Weinstock
-

Mana

Products,
Inc.






2013
PCC

Meeting Dates

February


February 12, 2013


Norwalk

May

July

October

November


May 7, 2013


Norwalk


July 16, 2013


Location TBD


October 1, 2013


Norwalk


November 12, 2013


Norwalk

Current
PCC

Agenda

Issue 1
-

Accounting for
Identifiable Intangible
Assets in a Business
Combination

Issue 3



Accounting for
Receive Variable


Pay
Fixed Interest Rate
Swaps

Issue 2


Private
Company Accounting for
Variable Interest Entities

Issue 4



Accounting for
Uncertain Tax Positions

Non
-
GAAP

Developments


The
AICPA's

financial reporting framework for small
-

and
medium
-
sized entities (
FRF

for
SMEs
) is designed for privately
owned, for
-
profit smaller enterprises that are not required to
produce financial statements in accordance with U.S.
GAAP
.




An exposure draft of this proposed financial reporting option
was released on Nov. 1, 2012, to obtain input from
stakeholders. The comment period has closed and letters
received are available to the public.



The AICPA expects to issue the final framework in late spring
2013.

AICPA FRAMEWORK FOR
SMES

AICPA FRAMEWORK FOR SMES


The Financial Reporting Framework for Small
-

and Medium
-
sized
Entities (
FRF

for
SMEs
) is a self
-
contained special purpose
framework intended for use by privately held small
-
to
-
medium
-
sized
entities (
SMEs
) in preparing their financial statements.




The
FRF

for
SMEs

draws upon a blend of traditional methods of
accounting with some accrual income tax methods. The framework
is being developed by a working group of CPA professionals and
AICPA staff who have years of experience serving smaller
-
to
-
medium
-
sized private entities. The
FRF

for
SMEs

has been exposed
for public comment to solicit broad stakeholder input.

AICPA FRAMEWORK FOR
SMES


The
FRF

for
SMEs

will be a less complicated
and less costly system of accounting for
SMEs

that are not required to produce U.S.
GAAP
-
based financial statements.


The
FRF

for
SMEs

will be a cost
-
beneficial
solution for owner
-
managers and others who
need financial statements that are prepared
in a consistent and reliable manner in
accordance with a framework that has
undergone public comment and professional
scrutiny.



Accounting principles in the
FRF

for
SMEs

will be responsive to the well
-
documented
issues and concerns stakeholders currently
encounter when preparing financial
statements for
SMEs
.


AICPA FRAMEWORK FOR SMES


The
FRF

for
SMEs

is being developed for smaller
-

to medium
-
sized, owner
-
managed, for
-
profit entities that need reliable financial statements where
internal or external users have direct access to the owner
-
manager and
GAAP

financial statements are not required. The
FRF

for
SMEs

may be
used by entities in most industry groups and by unincorporated and
incorporated entities.


The AICPA has no authority to
require the use of the
FRF

for
SMEs

for any entity. Therefore, the
FRF

for
SMEs

will have no effective
date and an owner
-
manager can
decide to use the
FRF

for
SMEs

once it is released. An owner
-
manager should make that decision
in conjunction with those who may
use the entity’s financial
statements.

AICPA FRAMEWORK FOR SMES


The AICPA cannot preclude an entity
from preparing its financial statements
under the
FRF

for
SMEs
. The
FRF

for
SMEs

is intended to be used by small
-

and medium
-
sized for
-
profit entities.
Typically, the
FRF

for
SMEs

would be
used by owner
-
managers who rely on a
set of financial statements to confirm
their assessments of performance, and
of what they own and what they owe
and the entity’s cash flows.

AICPA FRAMEWORK FOR SMES


The AICPA and the Financial Accounting Foundation
(
FAF
) are both committed to the private company financial
reporting constituency, however, the objectives of these
two efforts are different.


The new
FAF

Private Company Council will focus on
modifications to U.S.
GAAP

for private companies that
need or are required to have financial statements
prepared in accordance with
GAAP
.


The
FRF

for
SMEs

is a concise, highly relevant
framework for owner
-
managers of
SMEs

and their
external stakeholders where U.S.
GAAP

financial
statements are not required or necessary.

AICPA FRAMEWORK FOR SMES


Implementation guidance, in the form of application
examples, illustrative financial statements, a disclosure
checklist, and similar tools will be offered by the AICPA
to complement the
FRF

for
SMEs
. In addition, toolkits
will be available to help CPA firms introduce and explain
the
FRF

for
SMEs

and its advantages to clients and
financial statement users.

?

?

Questions

THANK YOU