The “Public Company” in Financial Reporting

• In Event: Breakfast with Research Round Table Forum
  In Workshop: Table 6

Abstract

Abstract Accounting Standard Update 2013-12 (ASU 2013-12) adds the seventh definition used to differentiate public vs. nonpublic entities in U.S. GAAP. The FASB carefully selected the distinct term public business entity and created the definition specifically as a glossary item, independent of any particular financial reporting topic. The expectation is that this definition will be used consistently in all future accounting standard updates that are based on recommendations of the Private Company Council, as it is in ASU 2014-02 and ASU 2014-03, as well as recommendations of the Emerging Issues Task Force (EITF) and the Financial Accounting Standards Board (FASB) itself. However, the only certainty provided by FASB is that this definition is appropriate in order to determine which entities are within the scope of the Private Company Decision-Making Framework: A Guide for Evaluating Financial Accounting and Reporting for Private Companies. Yet despite the narrow target of ASU 2013-12, there are indications that this definition is intended to be the culmination of the other six definitions and may supplant them. This research project will clarify the meaning and use of “public company” in current US GAAP, and trace the historical use of this concept in U.S. financial reporting.

Author

• Barbara W Scofield, Washburn University