ASC 205-40 and ASC 275 are applicable to both SEC registrants and private companies. However, the different environments in which SEC registrants and private companies operate may affect their considerations regarding the adequacy of disclosures of risks and uncertainties. Filings of SEC registrants are subject to review by the SEC staff and the registrants are accountable to shareholders who must rely on publicly disclosed information. Private company stakeholders are often lending institutions and shareholders who typically have more access to management to obtain information that may not be disclosed in the financial statements. While this difference may potentially influence the level of transparency in financial statement disclosures, both types of reporting entities should take care to provide an appropriate level of disclosure to meet their reporting objectives.
Private companies are subject to the general concentration disclosure requirements of ASC 275-10-50-16 to ASC 275-10-50-22. In addition, private companies may identify vulnerabilities from concentrations more frequently. For example, it may be more likely that a private company has a concentration of accounts receivable from one customer or has cash held at one financial institution that exceeds FDIC limits.
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