Project Update

Definition of a Nonpublic Entity

Last updated on December 23, 2013.  Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.

(Updated sections are indicated with an asterisk *)

The staff has prepared this summary of Board decisions for information purposes only. Those Board decisions are tentative and do not change current accounting. Official positions of the FASB are determined only after extensive due process and deliberations.

Project Objective
*Due Process Documents
*Decisions Reached at Last Meeting
*Summary of Decisions Reached to Date
Board/Other Public Meeting Dates
Background Information
*Contact Information

Project Objective

The objective of this project is to re-examine the definitions of a nonpublic entity and public entity in the FASB Accounting Standards Codification. The project will focus on defining what constitutes a public business entity to distinguish between different types of entities for standard-setting purposes and on determining which companies are to be excluded from the scope of the Private Company Decision-Making Framework. The project will also focus on whether a distinction or distinctions between not-for-profit entities is necessary and, if so, how that distinction or distinctions between particular types of not-for-profit entities might best be made.

*Due Process Documents

On December 23, 2013, the FASB completed this project with the issuance of Accounting Standards Update No. 2013-12, Definition of a Public Business Entity – An Addition to the Master Glossary.
On August 7, 2013, the FASB issued a proposed Accounting Standards Update, Definition of a Public Business Entity: An Amendment to the Master Glossary. The FASB invites individuals and organizations to send comments on all matters in the proposed Update. The comment period ended on September 20, 2013. On April 15, 2013, the Board and the Private Company Council issued an Invitation to Comment, Private Company Decision-Making Framework: A Guide for Evaluating Financial Accounting and Reporting for Private Companies. The comment period ends on June 21, 2013. The Invitation to Comment includes the Board’s tentative decisions about the types of business entities that would not be included in the scope of the Private Company Decision-Making Framework. On July 31, 2012, the Board issued an Invitation to Comment on a staff paper that outlines an approach for deciding whether and when to modify U.S. Generally Accepted Accounting Principles (GAAP) for private companies. The paper, Private Company Decision-Making Framework: A Framework for Evaluating Financial Accounting and Reporting Guidance for Private Companies contains initial FASB staff recommendations of criteria to determine whether and in what circumstances it is appropriate to adjust financial reporting requirements for private companies following U.S. GAAP. The comment period ended on November 9, 2012. 57 comment letters were received.

The Board’s tentative decisions reached to date about the definition of a private company and organizations in the scope of the framework are included in an appendix to the Invitation to Comment. However, the Board expects that not all types of entities that would be included in the scope of the framework would be eligible to apply every exception and modification provided by the Board and the PCC. For example, accounting practices followed by certain companies in certain industries. The Board plans to expose the proposed definition of a nonpublic entity for public comment and discuss the stakeholder input received with the PCC before finalizing its decisions.

*Decisions Reached at Last Meeting

See meeting minutes below.

*Summary of Decisions Reached to Date

See Accounting Standards Update 2013-12.

Board/Other Public Meeting Dates

The Board meeting minutes are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.

October 30, 2013 Board Meeting—Comment Letter Feedback and Redilberations
July 10, 2013 Board Meeting—Consequential amendments and next steps.
June 6, 2013 Board Meeting—Definition of a public company and not-for-profit distinction(s) for financial reporting purposes.
December 6, 2012 Private Company Council Meeting—Comment Letter Summary
June 6, 2012 Board Meeting—A private company that is controlled by a public company or controls a public company, and employee benefit plans
May 2, 2012 Board Meeting—For-profit conduit bond obligors
April 25, 2012 Board Meeting—Entities that file or furnish financial statements with the SEC and privately held financial institutions
March 7, 2012 Board Meeting—Agenda Decision

Background Information

The Accounting Standards Codification includes several definitions of a nonpublic entity and a public entity that the FASB established to address specific types of issues over the years, including the scope of a standard, differences in accounting or disclosure requirements, and different effective dates. As a result, the Board has received feedback from stakeholders requesting clarification of the existing definitions and ongoing questions about which definition of a nonpublic entity was used in various projects.

When providing feedback, stakeholders specifically questioned which nonpublic entities will qualify for practical expedients, reduced disclosures, and effective date deferrals. Some constituents have questioned which definition of a nonpublic entity is being used for purposes of the Private Company Decision-Making framework that is being developed.

In connection with our research project to develop a Private Company Decision-Making Framework, the staff has been conducting research to analyze the definitions of a nonpublic entity and public entity in the Codification and the reasons for distinguishing between different types of entities for standard-setting purposes.

Contact Information 

Elizabeth Gagnon
Project Manager
eagagnon@fasb.org