Established by the Financial Accounting Foundation (FAF) in 2012, the Private Company Council (PCC) advises the Financial Accounting Standards Board (FASB) on private company financial accounting and reporting issues and evaluates accounting standards for private company alternatives.

The PCC’s membership includes users of private company financial statements, including sureties, banks, lessors and other creditors; controllers, CFOs and other accounting-related personnel who regularly produce financial statements; and CPAs who provide audit and other forms of assurance on financial statements.

During its most recent meeting in December, the PCC discussed three current research projects:

• Lease accounting simplifications

• Subjective acceleration clauses and debt disclosures, and

• Debt modifications and extinguishments and troubled debt restructurings.

Lease Accounting Simplifications

There is ongoing research to determine whether there are opportunities to further simplify the guidance on leases for private companies. The PCC has a leases working group comprised of PCC members and members of the AICPA’s Technical Issues Committee (TIC). The working group is researching challenges that smaller private company lessees, in particular, are facing to see if there are ways to help address those challenges.

PCC members provided input on several areas being researched from a lessee perspective, including:

1. An optional single lease classification accounting model;

2. A scope exception for low value leases;

3. Lease modifications;

4. Embedded leases;

5. Lease classification criteria;

6. Weighted-average lease disclosures; and

7. Related party disclosures.

PCC members encouraged the working group to continue to research certain areas for private company simplification and expressed the need to conduct further outreach with private company stakeholders.

Subjective Acceleration Clauses and Debt Disclosures

Members also discussed the staff’s research on subjective acceleration clauses, which are prevalent in many private company debt arrangements, and influence whether debt is classified as a current or noncurrent liability in a classified balance sheet. The PCC is exploring how to reduce the complexity in applying the guidance and more closely align the guidance with lender practices. There was conversation, too, as to whether the scope of a potential project should include debt disclosures and whether those disclosures should narrowly focus on subjective acceleration clauses or be broader. The PCC indicated that it would work toward decision on whether to add a project to its agenda during an upcoming PCC meeting.

Debt Modifications and Extinguishments

In this area, the PCC is looking at certain areas of guidance that may be appropriate for simplification for private companies. PCC members discussed key takeaways from a November working group meeting, recent feedback from various private company stakeholders and supported the working group’s plan to develop specific alternatives on the debt modification and extinguishments and troubled debt restructuring guidance and solicit feedback on those alternatives.

Additional Issues

The PCC also advised the FASB on several FASB projects including Classification of Certain Digital Assets as Cash Equivalents, Accounting for Transfers of Crypto Assets, and Equity Method of Accounting. The PCC discussed private company implementation and ongoing application of the credit losses guidance in connection with the FASB’s Post-Implementation Review on that topic.

Final Thoughts

The next PCC meeting is scheduled for March 3 and the group PCC has several liaison meetings planned for the first quarter of 2026 with private company stakeholder groups, including users, preparers and practitioners..

The PCC is most effective when stakeholders such as, CPAs, provide feedback on our activities. More information about our work and how to get invoved is available by visiting our webpage and in the PCC's forthcoming 2025 Annual Report, which will talk about the accomplishments of the past year and look ahead to future PCC activities. Comments on any private company financial reporting issue or other feedback can be submitted via the PCC’s website.

The views expressed in this article are those of the author only. Official positions of the PCC and the FASB on accounting matters are determined only after extensive public due process and deliberation.