Three-Year Review of the Private Company Council

The Financial Accounting Foundation’s (FAF) Board of Trustees (Trustees) conducted an assessment of the Private Company Council (PCC) based on the PCC’s first three years of operation. The objective of this assessment was to:
  • Determine whether the PCC is meeting its primary responsibilities and mission
  • Provide an assessment of the PCC’s continuing role and effectiveness, and
  • Address changes that might be made to improve the PCC’s effectiveness.
The FAF Trustees issued a Request for Comment—Three-Year Review of the Private Company Council in February 2015 (press release, request for comment) to seek stakeholder comments on the PCC’s effectiveness, accomplishments, and role in setting standards for private companies.

The Trustees received 52 comment letters from a diverse group of stakeholders.

Most stakeholders expressed support for the PCC and generally agreed with the suggested improvements described in the Request for Comment. A majority of stakeholders agreed that the PCC has been successful in addressing the needs of users of private company financial statements. They specifically highlighted the success of the PCC’s private company alternatives in reducing costs and complexity for financial statement preparers.

A number of stakeholders reiterated the concerns they expressed in 2012 when the FAF Trustees first addressed how to best consider the needs of private company stakeholders in setting standards. Some were concerned with the reduction in comparability resulting from private company recognition and measurement alternatives. Other stakeholders fundamentally disagreed with the piecemeal approach to private company alternatives, preferring a comprehensive set of standards for private companies.

In response to stakeholder input, the FAF Trustees made targeted improvements to increase the PCC’s effectiveness without significantly changing the PCC’s roles and responsibilities. To enact these changes, the FAF Trustees amended the "Responsibilities and Operating Procedures of the Private Company Council." The amendments include, but are not limited to:
  • Increasing the PCC’s focus on providing the FASB with private company perspectives on the FASB’s active agenda projects
  • Creating a PCC Technical Agenda Consultation Group
  • Developing mechanisms to increase the transparency of the PCC’s discussions and views.
The report, Three-Year Review of the Private Company Council, mentions each of the questions asked and improvements suggested in the Request for Comment, summarizes stakeholder comments, and describes how the Trustees responded—primarily by amending the PCC Procedures.

The amended Responsibilities and Operating Procedures of the Private Company Council, effective January 1, 2016, are available here.