The Financial Accounting Standards Board (FASB) staff recently completed an initial assessment of the differences in the way that private company financial statements are used by lenders, investors and others. The assessment examined how and why the needs of those who use private company financial statements differ from those who use public company financial statements and how the cost-benefit-considerations of financial reporting vary between private and public companies. These findings will assist the Board in developing a new framework for deciding when and how to modify specific U.S. GAAP accounting standards for private company use.
The initial findings by the staff indicated six key differences in the way private and public companies’ financial statements are used; types of users, investment strategies, ownership structures, accounting resources and education. Click here for a more in depth analysis of these differences.
The FASB staff will continue to work with the Private Company Resource Group in developing a differential framework for the Board’s consideration. During this time, the FASB will continue to solicit input from those using, preparing and auditing the financial statements of private companies.
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