On May 23, the Financial Accounting Foundation (FAF) Board of Trustees established a new body to improve the process of setting accounting standards for private companies. The need for such a group has been debated for decades. The new group, the Private Company Council (PCC), will determine whether exceptions or modifications to existing nongovernmental U.S. Generally Accepted Accounting Principles (U.S. GAAP) should occur, and what those modifications should be.
Many think that the existing accounting standards group, Financial Accounting Standards Board (FASB), has been too focused on large publicly-traded companies and their complex issues. Those with this criticism assert that privately-held companies generally do not share the same risks and complexity, but have nevertheless been required by the FASB to follow difficult and costly financial reporting that is useful only for public companies. The change provides hope that the compliance costs for the privately-held companies will now be balanced with the cost of such compliance.
The PCC looks to have the possibility of being a big disappointment because it lacks autonomy from the FASB. Additional details are in this article.