PCC Ponders Why All Private Companies, Big and Small, Are Placed in Same Framework

By:
Chris Gaetano
Published Date:
Dec 14, 2016
Bigger_Smaller

The Private Company Council (PCC), during its last meeting, wondered why it is that every private company is placed in its decision-making framework when there's a pretty big difference between, say, a small auto repair business and a billion dollar international import/export company, even though both are technically private companies, according to the Journal of Accountancy

The Financial Accounting Foundation formed the PCC in 2012 due to consistent feedback saying private companies had different accounting needs than the public ones that are typically the focus of the Financial Accounting Standards Board (FASB). The PCC was formed to advise the FASB on private company matters and to propose modifications and exceptions to Generally Accepted Accounting Principles (GAAP) for private companies. During the PCC's last meeting, however, members noted that its decision-making framework casts a fairly wide net, encompassing both four-person companies and 4000-person companies. This can make it challenging to craft rules that make sense for both. 

However, while the PCC thought initially to revisit its decision-making framework to account for this, the Journal of Accountancy said they ultimately chose to instead ask the FASB to consider whether the smallest private businesses are part of this framework. The council raised similar concerns about scope regarding the FASB's recent project in defining what a public company even is for accounting purposes, as some financial services companies have objected being thought of as public business entities. 

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