Accounting for Private vs. Public Companies

• Assignment 2: Accounting for Private vs. Public Companies
  For  Assignment 2, you will compare accounting principles for private and  public companies. As you may have discovered as you’ve reviewed the  materials for this course, most of what is learned in accounting courses  focuses on public companies, not private ones. GAAP, as you have also  learned from your studies, may be followed by private companies, but it is only required  to be used by publicly traded companies. FASB, of course, is designated  by the SEC to establish and improve GAAP, so their focus is primarily  on publicly traded companies.
  FASB  has also recognized the importance and potential impact of private  company financial statements. According to Forbes, out of the 5.7  million firms with employees in the United States, less than 1 percent  have shares listed on a U.S. exchange. Although we tend to think of  private companies as small companies, the reality is quite the opposite,  with private firms accounting for 86.4 percent of U.S. firms with 500  or more employees.
  In recognition of the growing importance and impact of private companies, FASB has come up with a useful publication – Private Company Decision-Making Framework, A Guide for Evaluating Financial Accounting and Reporting for Private Companies. You can access this document by clicking here.
  In this guide, FASB identifies the following five Significant Differential Factors:
   

1. Number of primary users and their access to management
2. Investment strategies of primary users
3. Ownership and capital structure
4. Accounting resources
5. Learning about new financial reporting guidance 
6. For Assignment 2, write a 2-to-4 page paper in which you:
    

• Select two of the Differential Factors that interest you, and briefly explain why.
• In your own words, explain the Factor and why it is different from a publicly traded company.
• Identify the accounting risks associated with each of your chosen Factors. What would you recommend to minimize those risks?
• Based  on what you have learned this quarter, what components of the Balance  Sheet have the most potential to be impacted by the Differential Factors  you have chosen? Identify both positive and negative potential impacts.
• This course requires use of Strayer Writing Standards (SWS).  The format is different than other Strayer University courses. Please  take a moment to review the SWS documentation for details. 
• The specific course learning outcomes associated with this assignment are:
   
• Evaluate the liabilities portion of a balance sheet, including current liabilities, contingencies, and long-term liabilities.
• Assess GAAP, IFRS, and how to research utilizing the FASB Accounting Standards Codification
• Grading  for this assignment will be based on answer quality, logic/organization  of the paper, and language and writing skills, using the following rubric.
  
      
• By submitting this paper, you agree: (1) that you are  submitting your paper to be used and stored as part of the SafeAssign™  services in accordance with the Blackboard Privacy Policy;  (2) that your institution may use your paper in accordance with your  institution's policies; and (3) that your use of SafeAssign will be  without recourse against Blackboard Inc. and its affiliates.  
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