The Private Company Financial Reporting Committee held a meeting to discuss whether International Financial Reporting Standards should apply to private companies in the U.S., along with other matters.

Judy O’Dell, chair of the PCFRC, which is sponsored by the Financial Accounting Standards Board, with administrative support from the American Institute of CPAs, said the committee did not come to any definite decision on the matter. They discussed a recent webcast that the International Accounting Standards Board gave on its private entities project and where it stands. A document on the IASB project is scheduled for release in the first quarter of 2009. Once that document is issued, it could be used as a model for financial reporting by private companies in the U.S. as standards here converge with those abroad, or the AICPA may decide instead to stick with U.S. generally accepted accounting principles for private companies.

“We discussed whether private companies should go that way and use some modified form of IFRS, or maintain GAAP, which is the approach the Canadians are taking,” said O’Dell (pictured). “The main goal is to get the dialogue started and see which way people might go.”

U.S. standards-setters could take IFRS and create a version of the IASB private entities document that would be applicable to U.S. companies. “The advantage of that is that it’s based on IFRS, so if you’re a company that is contemplating going public, you wouldn’t need to make changes to your financial documents,” said O’Dell. “If we stayed on U.S. GAAP, somebody would have to set those standards, whether FASB or some other board.”

The committee also discussed FASB Interpretation No. 48, or FIN 48, “Accounting for Uncertainty in Income Taxes,” at great length, and whether the Financial Accounting Standards Board would be granting an exemption for private companies.

“If they’re going to grant the exemption, we would like to know as soon as possible,” said O’Dell. “So far it’s not even an agenda item. The time is drawing near when private companies would need to adopt it. We outlined several issues companies have had from our user panel at the end of August. We may get some disclosure relief for private companies, but nothing official has come out of FASB at this point.”

The committee also talked a bit about revenue recognition standards and how they relate to convergence with IFRS, but O’Dell noted that is still in an early discussion phase. Another matter was the IASB’s conceptual framework. The committee plans to send a letter by the end of the month that will “center on the reporting entity documents and whether parents-only financial statements should by permitted in the private company world under that document,” according to O’Dell. Also discussed briefly was FIN 46(R), “Consolidation of Variable Interest Entities.” FASB has produced an exposure draft about some changes in that standard, O’Dell noted.