The Financial Accounting Standards Board has issued a proposal that would exempt many private companies from applying the stringent consolidation guidance under U.S. GAAP to leasing companies under common control.

The proposal originally came from FASB’s sister organization the Private Company Council, which is also overseen by the Financial Accounting Foundation with the task of recommending alterations in accounting standards to make them less onerous for privately held companies. FASB is asking for feedback on the proposal, and stakeholders are asked to provide comments on the exposure draft for the proposed GAAP alternative, Applying Variable Interest Entity Guidance to Common Control Leasing Arrangements (formerly FIN 46(R) and FAS 167),  by Oct. 14, 2013.

The proposal would exempt many private companies from applying variable interest entity guidance to lessor companies under common control. A variable interest entity is a company in which the controlling financial interest is not established based on a majority of voting rights.

“This proposal is intended to help lenders and other users better align the information used in assessing the financial position of private companies that prepare financial statements,” said FASB chairman Russell G. Golden in a statement. “We look forward to receiving feedback on the effectiveness of the proposal from private company stakeholders.”

The effective dates will be determined after FASB and the PCC consider the feedback they receive on the exposure draft. Once they receive comments from the public, the PCC and FASB plan to the discuss the feedback at a PCC meeting scheduled for Nov. 12. The PCC will then consider changes to the original proposal and take a final vote before submitting to the FASB for a final decision on endorsement.

Last month, FASB submitted three other proposals from the PCC to address the concerns of private companies about accounting for intangible assets acquired in business combinations, goodwill and certain types of interest rate swaps (see FASB Issues Proposals for Private Company Accounting). The variable interest entity proposal was expected to be released soon afterward.

The exposure draft and a FASB in Focus summary document are both available on FASB's Web site.