When Hurricane Sandy battered the East Coast in late October, thousands of people lost power, while some areas were decimated by the force of the superstorm. In acknowledgment of this, the Financial Accounting Standards Board (FASB) extended the deadline for comment on a staff paper about potentially modifying accounting legislation
for private companies.
Specifically, the paper
, titled "Private Company Decision-Making Framework: A Framework for Evaluating Financial Accounting and Reporting Guidance for Private Companies," outlines an approach for determining whether and when to alter U.S. Generally Accepted Accounting Principles (GAAP). Private company stakeholders—both individuals and organizations—were invited to comment on six differentiating factors pertaining to the financial reporting considerations of private companies, including:
- Access to management
- Accounting resources
- Learning about new financial reporting guidance
- Ownership and capital structures
- Strategies for investment
- Types and number of financial statement users
In order to ensure that stakeholders affected by the storm were given the chance to weigh in, FASB chair Leslie Seidman announced earlier this month that the deadline had been lengthened to November 9 from the original cutoff of October 31.
"This will give everyone an opportunity to communicate their views, while providing the staff sufficient time to present its findings for deliberation by the Private Company Council and the FASB at the PCC's first public meeting on December 6," Seidman said in a statement
.Moving forward after comment period close
Now that the extended comment period has ended, the FASB and the PCC will use the feedback to identify the unique needs and challenges of those who use private company financial statements, with the goal of mitigating the complexity and cost of private company financial statement preparation in line with GAAP accounting compliance
standards. The FASB and the PCC must both agree upon the proposed decision-making framework before the process can move forward.
"The development of a sound decision-making framework is essential to our ongoing efforts to address the unique needs of private company stakeholders while maintaining the high quality of U.S. GAAP," Seidman said in a July statement
. "We anticipate that the guidance designed to identify cost-effective alternatives for private companies also will benefit some of the FASB's public and not-for-profit standard-setting activities."