In a recent letter to the Financial Accounting Standards Board (FASB), a Financial Executives International (FEI) subcommittee argued that FIN 48, the rule on accounting for income tax uncertainty, is irrelevant to private companies, and they should be exempted from compliance requirements.
The recommendation, sent by the FEI's Standards Subcommittee of the Committee on Private Companies (CPC) earlier this month, backs a similar request made on May 30 by the private companies financial reporting committee (PCFRC), which advises FASB on adapting generally accepted accounting principles, or GAAP, for private companies.
CPC member Daryl Buck notes that because most private companies' income taxes are paid by the owner, and not by the company, "a lot of FIN 48 disclosures are really irrelevant for the decision making by the users of those financial statements."
Recommended For You
The letters were prompted by FASB's postponement of FIN 48 for private companies from fiscal years beginning after Dec. 15, 2006 to the annual financial statements for fiscal years beginning after Dec. 15, 2007. "As it stands right now, a lot of private companies are incurring significant costs thinking they're going to have to comply with FIN 48 at the end of this year," observes Buck. "So, clearly, it would be preferable if FASB would give us some guidance in the very near term."
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
