The accounting and finance worlds seem to become more complex every day, whether that complexity is generated by government or industry standard setters, new products, or new markets. To combat this ever-increasing complexity, the Financial Accounting Standards Board (FASB), established the Private Company Council (PCC) in 2012.
The PCC was created to amend and simplify areas of accounting principles generally accepted in the United States (GAAP) that are considered challenging for private companies and that provide little value to readers of private company financial statements. These amendments are commonly called PCC alternatives.
The simplification of GAAP through PCC alternatives achieves two primary purposes. First, it makes GAAP much easier to understand for the readers of private company financial statements.
Second, the FASB recognizes that the value of this information to private companies is outweighed by the cost of implementing the rules. A necessary byproduct of the simplification is cost savings because less time is spent to understand and implement the rules, whether by private company staff or external accountants.
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