Action Alert No. 03-34
August 27, 2003
NOTICE OF MEETINGS
OPEN BOARD MEETING
Wednesday, September 3, 2003, 1:00 p.m.
The Board meeting will begin at 1:00 p.m. instead of 9:00 a.m.
- Permitted activities of qualifying special-purpose entities (SPEs). The Board will discuss the results of the public roundtable meetings and decide on a general approach to responding to the comments and meeting the objectives of the project. (Estimated 30-minute discussion.)
- Open discussion. If necessary, the Board will allow time to discuss minor issues with staff members on technical projects or administrative matters. Those discussions are held following regular Board meetings as topics come up.
OPEN EDUCATION SESSION
Wednesday, September 3, 2003, immediately following the Board meeting
The Board will hold an educational, non-decision-making session to discuss topics that are anticipated to be discussed at the September 10 Board meeting. Those topics will be posted to the FASB calendar four days prior to the education session.
OPEN MEETING WITH REPRESENTATIVES OF THE INSTITUTE OF MANAGEMENT ACCOUNTANTS
Friday, September 5, 2003, 10:00 a.m.
The Board will meet with representatives of the Financial Reporting Committee of the Institute of Management Accountants to discuss matters of mutual interest.
BOARD ACTIONS
The Board Actions are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions are included in an Exposure Draft for formal comment only after a formal written ballot. Decisions in an Exposure Draft may be (and often are) changed in redeliberations based on information provided to the Board in comment letters, at public hearings, and through other communication channels. Decisions become final only after a formal written ballot to issue a final Statement or Interpretation.
August 20, 2003 Board Meeting
Fair value measurement. The Board discussed APB and FASB pronouncements that require fair value measurements. The Board generally decided that the guidance for measuring fair value developed in this project would apply to those pronouncements, except for those that relate to stock-based compensation and leasing transactions, and FASB Statement No. 114, Accounting by Creditors for Impairment of a Loan.
Permitted activities of qualifying special-purpose entities (SPEs). The Board discussed a summary of the comments of respondents to the FASB Exposure Draft, Qualifying Special-Purpose Entities and Isolation of Transferred Assets. The comment period for the Exposure Draft ended on July 31, 2003, and comments were received from 52 respondents. No decisions were reached.
Pension disclosures. The Board discussed the following issues on disclosures for pensions and other postretirement benefits. The Board also discussed certain issues on a draft of the proposed Statement on employers’ disclosures about pensions and other postretirement benefits.
The Board considered several potential disclosures for multiemployer pension plans, including a narrative description of participation, the basis on which costs are charged and the cost rate, expected contributions for the next fiscal year, funded status of the plan, and the names of each of the plans. The Board unanimously agreed that none of the potential disclosures should be required.
The Board considered and unanimously agreed that disclosures similar to those required for pensions should be required for other postretirement benefits. The Board also considered whether disclosures, both pension and other postretirement benefits, should be subject to a quantitative significance threshold. The Board decided that there should not be any quantitative threshold for either pension or other postretirement benefit disclosures. Management’s discretion regarding whether the plans are immaterial, as applied today, should continue as the only threshold.
The Board considered the potential elimination of the income statement classification of net pension cost, interim period disclosures of net pension cost, and disclosure of the projected benefit payments. The Board agreed to eliminate the income statement classification of net pension cost while retaining the other disclosures.
The Board considered the addition of disclosures related to market-related value of plan assets, measurement date, and fair value of the benefit obligation. The Board agreed not to add any of the those disclosures and instead opted to add a disclosure requiring identification of significant changes that have occurred after the measurement date. Also, the Board agreed to add a disclosure about the makeup of company contributions to distinguish between cash and non-cash contributions.
The Board discussed two alternative illustrations of the disclosures and decided on the condensed version of the illustration. That illustration differs from the original illustration in that it eliminates the reconciliation of plan assets and obligations, while retaining key information such as actual return on plan assets, benefit payments, and contributions. It streamlines disclosures of projected benefit payments and combines assumptions into one table. The Board reaffirmed that expected contributions should be split between minimum funding requirements and additional contributions to be made at management’s discretion.
The Board also agreed with a year-end 2003 effective date for the proposed Statement. The Board directed the staff to proceed to a draft of a proposed Statement for vote by written ballot. The Board expects to issue the proposed Statement in the third quarter of 2003.
Business combinations: purchase method procedures. The Board met with representatives from Eli Lilly and Company to discuss research and development in the pharmaceutical industry and the impact of the Board’s February 5, 2003 tentative decision. That decision is to eliminate the requirement in FASB Interpretation No. 4, Applicability of FASB Statement No. 2 to Business Combinations Accounted for by the Purchase Method, to charge to expense certain in-process research and development (IPR&D) assets acquired in a business combination. The meeting was educational, and no decisions were reached.
FUTURE OPEN MEETINGS
The following is a list of open meetings tentatively scheduled through September. Because schedules may change, please check the FASB calendar before finalizing your plans. Revisions to this list since the last issue of Action Alert are highlighted in bold.
Tuesday, September 9, 2003—Liaison Meeting with the American Council of Life Insurers
Wednesday, September 10, 2003—FASB Board Meeting
Wednesday, September 10, 2003—FASB Education Session
Friday, September 12, 2003—Liaison Meeting with the Financial Managers Society
Wednesday, September 17, 2003—FASB Board Meeting
Wednesday, September 17, 2003—FASB Education Session
Wednesday, September 24, 2003—FASB Board Meeting
Wednesday, September 24, 2003—FASB Education Session
Thursday, September 25, 2003—Financial Accounting Standards Advisory Council Meeting
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