Established in 2012 by the Financial Accounting Foundation (FAF) to advise the FASB on the appropriate accounting treatment for private companies for items under active consideration on the FASB’s agenda, the Private Company Council also advises the FASB on possible alternatives within Generally Accepted Accounting Principles (GAAP) to address the needs of users of private company financial statements.

The following is an update on recent activities and highlights from the PCC’s 2025 Annual Report, which was published earlier this spring.

March 2026 Meeting Update

The PCC’s most recent meeting in March included discussion of three current research projects—and a fourth project added—that emerged from its structured process to evaluate our agenda priorities. The research projects address:

Employee Stock Ownership Plans: PCC members discussed recent feedback from private company financial statement stakeholders (for example, lenders and sureties) during PCC liaison meetings and in response to the FASB 2025 Invitation to Comment, Agenda Consultation (2025 ITC), which primarily focused on repurchase obligations of employee stock ownership plans from a plan sponsor perspective.

PCC members added this topic as an area to research as part of their agenda priorities.

Lease Accounting Simplifications: In collaboration with the PCC’s leases working group, the group is continuing its research to determine whether there are opportunities to further simplify the accounting guidance on leases for private company lessees.

PCC members discussed the key takeaways from the January leases working group meeting and recent stakeholder feedback. PCC members agreed with the following working group recommendations (all from a lessee perspective):

• Continue research on (a) lease modifications, (b) embedded leases and (c) lease classification criteria

• In combination with other lease accounting issues (rather than as a standalone project), continue research on (a) weighted-average lease disclosures and (b) related party lease disclosures

• Discontinue research on (a) an optional single lease classification accounting model and (b) a scope exception for low value leases.

Subjective Acceleration Clauses and Related Debt Disclosures: Members discussed the FASB 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 it with lender practices.

PCC members recommended that the FASB add a project to its technical agenda on subjective acceleration clauses in determining the classification of debt as a current or noncurrent liability in a classified balance sheet because the issue is not unique to private companies.

The PCC also recommended to FASB that the guidance be amended to:

• Remove the probability-based assessment guidance and instead, subjective acceleration clauses would affect the classification of debt only when triggered

• Describe a trigger as when a lender demands repayment of the underlying debt because of noncompliance with a subjective acceleration clause

• Require that long-term debt subject to a subjective acceleration clause be classified as a current liability when the subjective acceleration clause is triggered

• Make conforming changes to other areas of guidance that involve subjective acceleration clauses, such as the intent and ability to refinance guidance and revolving credit agreements

• Require certain disclosures when there is a trigger of a subjective acceleration clause.

At a future meeting, FASB will discuss subjective acceleration clauses and related debt disclosures, including the PCC’s recommendations, for an agenda decision and initial deliberations.

Debt Modifications and Extinguishments and Troubled Debt Restructurings: PCC members discussed the key takeaways from the January debt modifications and extinguishments working group meeting. PCC members expressed concerns with the complexity of the current accounting models for debt restructurings and discussed recent feedback received in response to the 2025 ITC. PCC members acknowledged that the FASB plans to discuss this topic at a future meeting and agreed to postpone further research on this topic until that meeting takes place.

Recent Town Hall and Liaison Meetings

PCC members discussed feedback received during the recent liaison meetings with:

• The Institute of Management Accountants (IMA) Small Business Shared Interest Group

• The Construction Financial Management Association (CFMA) Emerging Issues Committee

• Representatives of the surety industry through the National Association of Surety Bond Producers (NASBP) and The Surety and Fidelity Association of America (SFAA).

PCC members will hold a town hall at AICPA ENGAGE Conference in June. The next PCC meeting is scheduled for June 1-2.

The PCC 2025 Annual Report

The PCC recently published its 2025 Annual Report, which highlights the year’s accomplishments and activities. The PCC’s first Annual Report, published in March 2025, grew out of the FAF’s final report on the 2023-2024 Review of the Private Company Council.

The 2025 report includes a message to private company stakeholders, 2025 highlights and key progress areas, a section on stakeholder engagement, a look at PCC agenda priorities and a forward-looking strategy section.

If you have any private company financial reporting issues to raise with the group or if you are interested in becoming more involved as either a PCC member, a PCC working group member or providing feedback on FASB or PCC initiatives, email us through the Contact Us portion of our webpage.

More information about our work is available by visiting FASB online and in the PCC's 2025 Annual Report.

We look forward to continuing to engage with CalCPA members over the course of 2026.

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