PCC votes to remove effective dates from GAAP alternatives
The Private Company Council (PCC) voted during a meeting Friday to remove the effective dates from the four accounting standards updates that it has created to provide GAAP alternatives for private companies.
FASB will meet soon to consider endorsement of the PCC’s decision. If FASB endorses it, a standard removing the effective dates would be issued.
Removing the effective dates would permit private companies to forgo a preferability assessment the first time they elect the accounting alternatives contained in those updates.
All four standards containing GAAP alternatives for private companies were issued in 2014:
FASB’s preferability requirement in Topic 250, Accounting Changes and Error Corrections, permits the use of an allowable alternative accounting principle on the basis that it is preferable.
But advocates of an unconditional first-time option for the PCC alternatives have said private companies sometimes experience changes in circumstances that would have led them to adopt a PCC alternative if those changes had occurred before the effective date.
The PCC also voted to add a project to its agenda concerning the application of VIE guidance to companies under common control that are not already addressed in ASU No. 2014-07. The PCC directed FASB’s staff to work with private company stakeholders to develop examples to help clarify application of VIE guidance in such situations.
Friday’s meeting was the last for Billy Atkinson, who is retiring after chairing the PCC in its first three years of existence. Candace Wright will succeed Atkinson as chair
—Ken Tysiac (firstname.lastname@example.org) is a JofA editorial director.
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