Definition of a Nonpublic Entity
Last updated on April 30, 2013. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.
(Updated sections are indicated with an asterisk *)
The staff has prepared this summary of Board decisions for information purposes only. Those Board decisions are tentative and do not change current accounting. Official positions of the FASB are determined only after extensive due process and deliberations.
The objective of this project is to re-examine the definition of a nonpublic entity. The project will focus on defining what constitutes a private company (nonpublic business entity) to distinguish between different types of entities for standard-setting purposes and on determining which companies are to be included in the scope of the Private Company Decision-Making Framework. The project will also focus on what constitutes a nonpublic not-for-profit entity.
*Due Process DocumentsOn April 15, 2013, the Board and the Private Company Council issued an Invitation to Comment, Private Company Decision-Making Framework: A Guide for Evaluating Financial Accounting and Reporting for Private Companies. The comment period ends on June 21, 2013. The Invitation to Comment includes the Board’s tentative decisions about the types of business entities that would not be included in the scope of the Private Company Decision-Making Framework.
- Download the Invitation to Comment issued on April 15, 2013.
- Read the Press Release issued on April 15, 2013.
- Read the FASB In Focus issued on April 15, 2013.
The Board’s tentative decisions reached to date about the definition of a private company and organizations in the scope of the framework are included in an appendix to the Invitation to Comment. However, the Board expects that not all types of entities that would be included in the scope of the framework would be eligible to apply every exception and modification provided by the Board and the PCC. For example, accounting practices followed by certain companies in certain industries. The Board plans to expose the proposed definition of a nonpublic entity for public comment and discuss the stakeholder input received with the PCC before finalizing its decisions.
- Download the FASB Invitation to Comment.
- Read comment letters on the Invitation to Comment.
- Read the comment letter summary on the Invitation to Comment.
- Read the press release introducing the Invitation to Comment.
- Read the FASB in Focus which provides a summary of the proposals contained in the Invitation to Comment.
- Listen to the podcast released in August 2012 discussing the Invitation to Comment
- Read the news release for additional information about the agenda project.
The Board plans to address additional issues necessary to finalize the types of business entities that would not be included in the scope of the Private Company Decision-Making Framework. The Board also will consider what constitutes a nonpublic not-for-profit entity. The Board expects that the next phase of this project will result in the issuance of an Exposure Draft for public comment.
Please refer to the Current Technical Plan for more information on the timing of the project.
Board/Other Public Meeting Dates
The Board meeting minutes are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.
|December 6, 2012||Private Company Council Meeting—Comment Letter Summary|
|June 6, 2012||Board Meeting—A private company that is controlled by a public company or controls a public company, and employee benefit plans|
|May 2, 2012||Board Meeting—For-profit conduit bond obligors|
|April 25, 2012||Board Meeting—Entities that file or furnish financial statements with the SEC and privately held financial institutions|
|March 7, 2012||Board Meeting—Agenda Decision|
The Accounting Standards Codification includes several definitions of a nonpublic entity that the FASB established to address specific types of issues over the years, including the scope of a standard, differences in accounting or disclosure requirements, and different effective dates. As a result, the Board has received feedback from stakeholders requesting clarification of the existing definitions and ongoing questions about which definition of a nonpublic entity was used in various projects.
When providing feedback, stakeholders specifically questioned which nonpublic entities will qualify for practical expedients, reduced disclosures, and effective date deferrals. Some constituents have questioned which definition of a nonpublic entity is being used for purposes of the Private Company Decision-Making framework that is being developed.
In connection with our research project to develop a Private Company Decision-Making Framework, the staff has currently been conducting research to analyze the definitions of a nonpublic entity and public entity in the Codification and the reasons for distinguishing between different types of entities for standard-setting purposes.
Contact InformationElizabeth Gagnon
Postgraduate Technical Assistant
Postgraduate Technical Assistant