The Private Company Council held its inaugural meeting in early December to discuss how accounting standards should be adjusted for privately held companies.

During the meeting, the PCC identified four areas to research for agenda consideration: consolidation of variable interest entities; accounting for "plain vanilla" interest rate swaps; accounting for uncertain tax positions; and recognizing and measuring, at fair value, various intangible assets (other than goodwill) acquired in business combinations.

"These four areas are often top of mind for users, preparers and auditors of private company financial statements," said PCC Chairman Billy Atkinson in a statement. "We are eager to review the research, and we look forward to discussing the issues in more detail at our next meeting in February. After we discuss these issues further, we'll make a decision about which projects to add to the PCC agenda."

The PCC was established in May by the Financial Accounting Foundation to work with FASB to determine whether and when to modify U.S. GAAP for private companies.

FASB staff members presented to the PCC the issues that they had identified as being the top areas of concern for a range of constituents. The PCC directed the FASB staff to develop agenda research memoranda on:

• Accounting Standards Codification Topic 810, Consolidation, which involves financial reporting by companies involved with variable interest entities.
• Accounting for "plain vanilla" interest rate swaps, which are used to convert variable interest rates on loans to fixed interest rates, and vice versa, as referenced in ASC Topic 815, Derivatives and Hedging.
• ASC Topic 740, Income Taxes, which is intended to increase relevance and comparability in reporting information about uncertain tax positions.
• Recognizing and measuring various intangible assets (other than goodwill) acquired in business combinations, including providing Level 3 fair value measurements and disclosures associated with them, as referenced in ASC Topic 805.

The following items were also addressed during the meeting:

• The official transition from the Private Company Financial Reporting Committee, including a report that summarizes recent PCFRC activities, lessons learned and suggestions on FASB projects that the PCC may want to monitor;
• An update on FASB's private company decision-making framework;
• An update on FASB's project on the definition of a nonpublic entity, including a summary of outreach and feedback; and,
• A discussion on the current FASB project on going concern.

"We are very pleased to see the PCC off and running," said FAF president and CEO Teresa Polley. "This council represents a critical milestone along our journey to improve reporting for private companies."