FAF TRUSTEES TRANSITION PRIVATE COMPANY COUNCIL OVERSIGHT TO STANDARD-SETTING PROCESS OVERSIGHT COMMITTEE
Norwalk, CT—November 15, 2016—The Board of Trustees of the Financial Accounting Foundation (FAF) today approved the transition of oversight responsibility for the Private Company Council (PCC) from the Trustees’ Private Company Review Committee (PCRC) to its Standard-Setting Process Oversight Committee (SSPOC). The SSPOC will assume PCC oversight responsibilities effective January 1, 2017, at which time the PCRC will be disbanded.
Established by the FAF Trustees in 2012, the PCC serves as the primary advisory body to the Financial Accounting Standards Board (FASB) on the appropriate treatment for private companies for accounting standards under active consideration on the FASB’s technical agenda. The PCC also proposes to the FASB alternatives to existing Generally Accepted Accounting Principles (GAAP), if needed, to address the needs of private company stakeholders.
The PCRC was created as a special-purpose committee to oversee the PCC’s creation and the initial interactions and activities between the PCC and the FASB, and to ensure that the FASB engages in adequate consideration of private company financial reporting issues throughout the cycle of its standard-setting process.
In November 2015, after seeking stakeholder feedback and concluding its Three-Year Review of the PCC, the FAF Trustees agreed that in 2016 the PCRC would begin transition of oversight responsibility to the SSPOC, and that the SSPOC would assume PCC oversight responsibility no later than the end of 2017.
“The PCRC has had a critical role in fostering the PCC’s success, and in facilitating its positive working relationship with the FASB to help make private company financial reporting more useful and relevant for users of private company financial statements,” said Charles H. Noski, chairman of the FAF Board of Trustees.
“In the past year, the PCRC and SSPOC worked closely together to ensure a smooth transition of oversight. The FAF Trustees believe that the SSPOC is ready for the responsibility to evaluate the adequacy, transparency, independence, and efficiency of the processes employed by the PCC and the FASB in establishing and improving financial accounting and reporting standards for private companies.”
To ensure a smooth transition, three members of the PCRC (Diane M. Rubin—Chair, Eugene Flood, Jr., and Terry Warfield) also serve on the SSPOC. Other SSPOC members also bring private company experience, affiliation, or perspectives to the process. The FAF Trustees will look to maintain this SSPOC composition on an ongoing basis.
The FAF Trustees took other important steps to ensure a smooth transition.
- The FAF Trustees modified the SSPOC charter (effective January 1, 2017) to include the PCC oversight responsibilities currently contained within the PCRC charter.
- The FAF Trustees added activities typically performed by the PCRC related to PCC oversight to the 2017 SSPOC Workplan. Additionally, PCC-related information and materials will be included in FASB’s materials and reporting at SSPOC meetings beginning in 2017.
- SSPOC members proactively attended important private-company related meetings. For example, SSPOC members attended all the 2016 PCRC meetings, and each SSPOC member observed at least one PCC meeting/Town Hall in 2016.
- FASB Chairman Russell G. Golden began to report on private company and PCC-related activities at SSPOC meetings in 2016, and will continue to do so on an ongoing basis.
- The FASB’s current liaison to the PCC, FASB Member Daryl E. Buck, met with the SSPOC in October 2016 and provided observations and perspectives on PCC progress, activities, and interactions. Harold L. Monk Jr., who will become the new FASB liaison to the PCC on January 1, 2017, will continue to meet with the SSPOC on an ongoing basis.
About the Financial Accounting Foundation
Established in 1972, the Financial Accounting Foundation (FAF) is the independent, private-sector, not-for-profit organization based in Norwalk, Connecticut responsible for the oversight, administration, financing, and appointment of the Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB). The FASB and GASB establish and improve financial accounting and reporting standards—known as Generally Accepted Accounting Principles, or GAAP—for public and private companies, not-for-profit organizations, and state and local governments in the United States. For more information, visit www.accountingfoundation.org.