Chief among the actions taken at the September 16 FASB PCC meeting was a vote recommending that FASB permit an alternative treatment in GAAP for private companies. This will allow an exemption from the requirement to separately recognize and measure certain identifiable intangible assets in a business combination.
The PCC’s reccomendation will go before the FASB for endorsement at a future board meeting.
Also at yesterday’s PCC meeting, the Council shared its views with FASB on the leases project, and discussed potential improvements in accounting for stock-based compensation.
One of the advantages of the PCC’s focused efforts on simplifying GAAP for private companies is that some of their deliberations and actions have been taken up by the FASB and considered, and in some cases applied, as amendments to GAAP for public companies. On the subject of potential improvements for stock-based comp accounting, FASB’s PCC Media Meeting Recap stated that the FASB Board would consider adding to its agenda a project on improving stock-comp accounting for both public and private companies, and would look to the PCC to advise it with respect to private companies.
AICPA Discussion Paper on Auditing
In other Private Company related news, the AICPA is seeking comment on its Discussion Paper on Enhancing Audit Quality.
As noted in AICPA Seeks Feedback on Private Entity Audit Quality Initiative by Ken Tysiac in the Journal of Accountancy online, AICPA President Barry Melancon stated that, “The goal [of the EAQ initiative] is to align the objectives of all audit-related AICPA efforts and collectively improve the quality of audit services delivered by the profession.”
Although a discussion paper is the first document issued in the AICPA’s standard-setting process, it is worth noting this development - as an early indication of the direction the AICPA is currently headed - before it moves to the proposed standard-setting phase.
Personally, I see, among others, two take-aways from the AICPA’s Discussion Paper:
- The AICPA is looking to create an improved and level playing field for all of its auditing and professional standards, and
- The AICPA specifically states it is planning on “releas[ing] a rigorous, profession-wide competency framework that has been validated by experts and regulators from around the globe.
A third possible takeaway - is that the attempt to "align" the objectives of all audit related AICPA efforts, and improve the quality of audit services delivered by the "profession" - the phrase also used in the
AICPA's Aug. 7 press release, could subliminally signal to some that there is common set of objectives of high quality audits for the auditing profession, i.e. CPAs and CPA firms that audit both public companies (under auditing standards established by the PCAOB) and private companies (under auditing standards established by the AICPA). See the related article by FEI Daily's Editor-in-Chief, Christopher Westfall,
Little Difference Between Private Company, Public Company Audits: Study. This view would align with the view that there is a 'trickle-down' or 'trickle-sideways' affect running between PCAOB standard setting and AICPA standard setting for private companies. Additionally, both the AICPA and the PCAOB reference developments of the International Audit and Accounting Standards Board (IAASB).
Further information about the AICPA’s EAQ initiative can be found on the AICPA’s EAQ Resources Page.
Speakers just announced for the FEI conference’s panel on Profitability: Unlocking the Value in Your Business, include Susan Kantor, Partner, PwC , Panel Moderator, with a panel including Rodger Howell, Principal, PwC, Dave Donat, President and CEO, ProducePro, Inc., Neal R. Restivo, VP and CFO, Oatey Co., and Sharon Schuler, SVP of Americas Region Finance, Clarks Americas.