A recent summary of current feedback to the FASB’s proposal to establish a Private Company Standards Improvement Council (PCSIC) has just been posted by the Financial Executive Institute (FEI). Of major concern: the so called “veto power” that the FASB’s parent, the Financial Accounting Foundation (FAF), would retain to ratify any of the council’s recommendation to modify GAAP for private companies.
A key related point was who would appoint the chair of any private council; or, possibly more important, who would set the council’s agenda. In light of “pent-up frustration” over past failures to improve GAAP for private companies, many roundtable participants voiced the need for any private company council, once established, to enjoy some “quick successes.” One panelist, from a private equity firm, urged “clarity” and not just cost-relief as a primary objective of any private company proposals. Reducing “disclosure overload,” other panelists noted, might well permit users of private company financial statements “to see the forest for the trees.” At the conclusion of the meeting, FASB chair Leslie Seidman indicated that the board’s next step would be to issue a proposed private company conceptual framework “within a couple of months.”