Private companies warn accounting rulemakers: Don't oversimplify who controls a business

Private companies warned U.S. accounting rulemakers in June not to turn the messy question of who controls a business into a rigid accounting checklist. 

Members of the Financial Accounting Standards Board’s (FASB’s) Private Company Council said on June 2, 2026, that clearer guidance on common control could help companies stop hunting through unofficial accounting guidance for answers. 

But they warned that family businesses, trusts, investment funds, and handshake-style business relationships often do not fit neatly into a legal box — and a bad definition could bring real consequences for loans, leases, acquisitions, and financial statements.

A high-stakes definition

The issue matters because common-control calls can ripple through major accounting decisions, including business combinations, consolidations, leases. and credit losses. 

In plain terms, common control usually means two businesses are controlled by the same parent, person, or group. The hard part comes when control is split among relatives, trusts, investment funds, or people who act together without a tidy ownership chart. 

FASB added the issue to its technical agenda in January 2026 after hearing that companies and accountants often rely on nonauthoritative sources because U.S. accounting rules do not formally define common control. 

Staff said the term is generally understood to cover a parent and the entities it consolidates, as well as entities consolidated by the same parent. 

But the easy cases end fast. 

Things get murkier when ownership is spread across several people or entities and accountants must decide whether those parties are acting together. 

Family businesses test the rulebook 

Private-company advisers said those gray areas are routine in closely held and family-owned businesses. 

Council members said private-company ownership often defies a checklist. 

Existing accounting and regulatory references to family relationships already vary. Some focus on spouses and children. Others stretch to siblings, in-laws or relatives who may influence an owner or manager. 

Douglas Uhl, director of financial enablement and internal assurance at Chick-fil-A Inc. corporate, said a narrow immediate-family test “sort of ignores the nuance that is family.” 

An uncle, aunt, or other relative may have more sway over a business decision than members of a traditional nuclear family, he said. 

Lender perspective: Keep it flexible 

The same warning came from the lending side: Don’t turn a judgment call into a straitjacket.

Private companies don’t want a one-size-fits-all box 

Council members did not reject the idea of defining common control. 

Several acknowledged that clearer guidance could help companies and accountants avoid rummaging through nonauthoritative sources for answers. 

But their message was blunt: Preserve judgment, use examples, and do not force messy private-company ownership structures into a one-size-fits-all box. 

FASB staff said future board decisions will take the council’s feedback into account, including how any definition would apply to private-company fact patterns.