The American Institute of Certified Public Accountants’ (AICPA) Financial Reporting Executive Committee (FinREC) recently issued for comment an early working draft of two revised chapters from the AICPA Valuation of Privately-Held Company Equity Securities Issued as Compensation Guide (the Guide). The updated non-authoritative interpretive guidance provides both accounting and valuation considerations relevant to stock-based compensation awards granted by privately held entities when there are secondary market transactions in their shares. The interpretive guidance is intended to better align with the requirements in Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820, Fair Value Measurement, and ASC 718, Compensation—Stock Compensation.

The release of these two chapters is the first step in significant enhancements expected to be made to the Guide since its last update in 2013. However, no timeline has been communicated as to when other proposed chapter updates may be released.

For some entities, the proposed updates may be viewed as a change in practice and could have implications for financial reporting valuations of privately held entity common stock underlying stock-based compensation awards. As a result, impacted preparers of financial statements, independent auditors, and valuation specialists are encouraged to read the working draft chapters. Comments are due to the AICPA by September 20, 2024.

Source: RSM US LLP.
Reprinted with permission from RSM US LLP.
© 2024 RSM US LLP. All rights reserved. https://rsmus.com/insights/financial-reporting/aicpa-releases-proposed-revisions-accounting-valuation-guide.html

RSM US LLP is a limited liability partnership and the U.S. member firm of RSM International, a global network of independent assurance, tax and consulting firms. The member firms of RSM International collaborate to provide services to global clients, but are separate and distinct legal entities that cannot obligate each other. Each member firm is responsible only for its own acts and omissions, and not those of any other party. Visit rsmus.com/about for more information regarding RSM US LLP and RSM International.

At Keegan Linscott & Associates, our people are our greatest asset. We embody a commitment to our people in our culture of openness, cooperation, teamwork and community service. Keegan Linscott provides exceptional training, coaching, a positive work/life balance and opportunities for personal and professional development. Keegan Linscott’s dedicated team of multi-faceted professionals stand ready to provide the highest quality of audit, tax and consulting services to our valued clients and community. We are leaders in our practice areas and are uniquely qualified to provide innovative and practical solutions.

As a group of practitioners working together, the professionals at Keegan Linscott are able to specialize in specific areas of accounting, audit, taxation, and consulting – a key advantage which allows us to offer a higher standard of service quality.

For more information on how Keegan Linscott & Associates, PC can assist you, please call (520) 884-0176.