1) Private Company Accounting
Update
June 26, 20115
George Beckwith, Private Company Council Member
Chief Financial Officer, National Gypsum Company
The views expressed in this presentation are those of the presenters. Official positions of the FASB are reached
only after extensive due process & deliberations
Copyright 2014 by Financial Accounting Foundation, Norwalk, CT. For non-commercial, educational /academic purposes only.
2) Disclaimer
Caveat on Content
§ï‚§â€¯ When I state opinions, they are my own
§ï‚§â€¯ I have tried to update these slides based on our last
meeting but some items are somewhat fluid
§ï‚§â€¯ Everything else is also an example (especially financial
statement presentation and my views on OCI)
§ï‚§â€¯ I will surely say things others don’t agree with
Copyright 2014 by Financial Accounting Foundation, Norwalk, CT.
For non-commercial, educational /academic purposes only.
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3) A
Few
Words
of
Thanks
§ï‚§â€¯ NASBA for Leadership
§ï‚§â€¯ FAF and Mack Lawhon for courage and support
§ï‚§â€¯ Other PCC members including Billy Atkinson and
Diane Rubin
§ï‚§â€¯ FASB members
§ï‚§â€¯ NASBA Leadership attending PCC meetings – Carlos
and Walter. Visible support of the process makes a
difference.
Copyright 2014 by Financial Accounting Foundation, Norwalk, CT.
For non-commercial, educational /academic purposes only.
3
4) The
PCC
and
Me
Who We Are – Who I Am
§ï‚§â€¯ 9 members and a Chair
-  Users, Preparers and Practitioners
-  Most of us have multiple perspectives
§ï‚§â€¯ Charleston SC, public accounting to Charlotte NC
§ï‚§â€¯ CFO of a large privately held company
-  Building products industry
-  Have lots of customers and vendors
-  Cash is more relevant than reported earnings
§ï‚§â€¯ Also a beekeeper (if Billy can tell stories, so can I)
Copyright 2014 by Financial Accounting Foundation, Norwalk, CT.
For non-commercial, educational /academic purposes only.
4
5) FAF
Governance
of
the
PCC
PCC is still new
§ï‚§â€¯ While we have been around 3 years, we are still
toddlers
§ï‚§â€¯ Year 1 - establishing relationships as much as initial
projects (low hanging fruit)
§ï‚§â€¯ Year 2 – dealing with harder issues, beginning to gel
as a group and with others (staff, FASB)
§ï‚§â€¯ Year 3 starts the review process
§ï‚§â€¯ Not time to claim we are mature enough for less FAF
oversight to ensure FAF focus
Copyright 2014 by Financial Accounting Foundation, Norwalk, CT.
For non-commercial, educational /academic purposes only.
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6) Outreach
is
important
§ï‚§â€¯ Town Halls (Seattle, Ohio State, SMU)
§ï‚§â€¯ NAATS (next month)
§ï‚§â€¯ TIC outreach
§ï‚§â€¯ Speeches (Billy talks at least once or twice a month)
-  Others each give talks regularly
§ï‚§â€¯ Must hear ‘from the horses mouth’ what they would do
if they were in charge of GAAP
§ï‚§â€¯ More outreach is better, we have had too little from
private companies in the past
Copyright 2014 by Financial Accounting Foundation, Norwalk, CT.
For non-commercial, educational /academic purposes only.
6
7) PCC
structure
§ï‚§â€¯ Number of people seems fine
§ï‚§â€¯ Number of meetings seems OK
§ï‚§â€¯ Time required can be significant
-  Outreach
-  Thought processing
-  Socialization of thoughts and issues
§ï‚§â€¯ The Chair should be a compensated position
-  Spends more time for the cause than most FAF Board
members
Copyright 2014 by Financial Accounting Foundation, Norwalk, CT.
For non-commercial, educational /academic purposes only.
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8) What
the
PCC
Has
Accomplished
ASUs to help private companies
§ï‚§â€¯ 4 ASUs
-  Goodwill amortization – 10 years or less
-  Customer Lists (goodwill in an acquisition)
-  Simplified hedging for floating to fixed interest rate
hedges
-  VIEs treatment of lessors under common control (the
implied guarantee test)
Copyright 2014 by Financial Accounting Foundation, Norwalk, CT.
For non-commercial, educational /academic purposes only.
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9) What
the
PCC
Has
Accomplished
Additional Activities
§ï‚§â€¯ Unconditional One Time Option without assessing
‘Preferability’ – very important and underway
§ï‚§â€¯ Private Company Decision Making Framework to
frame discussions around when alternatives may need
to be considered
§ï‚§â€¯ Definition of a private business entity
§ï‚§â€¯ Development Stage Enterprise disclosures
§ï‚§â€¯ Going Concern disclosures
§ï‚§â€¯ Advising on current agenda topics (leases, etc.)
Copyright 2014 by Financial Accounting Foundation, Norwalk, CT.
For non-commercial, educational /academic purposes only.
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10) Major
projects
underway
Major current projects
§ï‚§â€¯ Share based compensation
§ï‚§â€¯ Current Debt classification
§ï‚§â€¯ Simplification issues
-  Make GAAP more relevant to Main Street
§ï‚§â€¯ To Do – sort out when agenda items affect public
companies
-  Those topics are still of importance to private companies
Copyright 2014 by Financial Accounting Foundation, Norwalk, CT.
For non-commercial, educational /academic purposes only.
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11) FASB
and
Agenda
Setting
Owning the agenda controls the results achievable
§ï‚§â€¯ Russ Golden gets it
§ï‚§â€¯ The PCC needs to be able to decide what projects are
most relevant – set its own agenda
§ï‚§â€¯ Without agenda setting ability, difficult projects may not
get the resources needed to address them (they are
difficult for a reason)
§ï‚§â€¯ We have to work together and coordinate agendas
Copyright 2014 by Financial Accounting Foundation, Norwalk, CT.
For non-commercial, educational /academic purposes only.
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12) Advisory
vs.
Standard
Setting
Carrot and Stick
§ï‚§â€¯ I was on the PCFRC as well
§ï‚§â€¯ We could not effectively influence change but had a
better relationship with the FASB at the end
§ï‚§â€¯ PCC has the structure to require that change be
addressed
-  Should not be confrontational
-  Advisory only would be a mistake
Copyright 2014 by Financial Accounting Foundation, Norwalk, CT.
For non-commercial, educational /academic purposes only.
12
13) 3
Year
Review
–
NASBA
comments
§ï‚§â€¯ Thank you for you comment letter - I agree with you
§ï‚§â€¯ My opinion is we would not have accomplished what
we did if those changes were in place from the
beginning
§ï‚§â€¯ It is getting more difficult, not easier to make changes
§ï‚§â€¯ The support of FAF and NASBA is important
§ï‚§â€¯ An example of what we can accomplish -
Copyright 2014 by Financial Accounting Foundation, Norwalk, CT.
For non-commercial, educational /academic purposes only.
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14) My
Personal
Crusade
OCI
§ï‚§â€¯ OCI is ridiculous
§ï‚§â€¯ Changes to Cash Flow Statement
-  Merge financing and Investing
-  Add non-operating external cash sources and uses
§ï‚§â€¯ Align the Income Statement with Cash Flow Statement
-  Earnings from current operations
-  Earnings from long term operating decisions
-  Earnings related to external factors
§ï‚§â€¯ Impact – EBITDA , segregation of fair value, no
derivative documentation, relevant and decision useful
Copyright 2014 by Financial Accounting Foundation, Norwalk, CT.
For non-commercial, educational /academic purposes only.
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