Action Alert No. 03-29
July 23, 2003

NOTICE OF MEETINGS

OPEN BOARD MEETING

Wednesday, July 30, 2003, 9:00 a.m.

  1. Pension disclosures. The Board will continue its discussions about disclosures. Specifically, the Board will address which of the additional disclosures about pensions also should be required for other postretirement benefits and possible additional disclosures about multiemployer pension plans. (Estimated 45-minute discussion.)

  2. Financial instruments: derivatives implementation. The Board will discuss the staff’s proposed guidance on Statement 133 Implementation Issue No. A23, “Prepaid Interest Rate Swaps,” and an analysis of comment letters received. (Estimated 30-minute discussion.)

  3. 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, July 30, 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 future Board meetings. Those topics will be posted to the FASB calendar four days prior to the education session.

OPEN MEETING WITH REPRESENTATIVES OF THE EDISON ELECTRIC INSTITUTE

Tuesday, July 29, 2003, 3:00 p.m.

The Board will meet with representatives of the Edison Electric Institute to discuss matters of mutual interest.

OPEN MEETING OF THE EMERGING ISSUES TASK FORCE

Thursday, July 31, 2003, 8:00 a.m.–4:00 p.m.

The task force plans to discuss all of the following issues in the order shown:

  1. Issue No. 03-5, "Applicability of AICPA Statement of Position 97-2, Software Revenue Recognition, to Non-Software Deliverables in an Arrangement Containing More-Than-Incidental Software"

  2. Issue No. 03-1, "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments"

  3. Issue No. 03-10, "Application of EITF Issue No. 02-16, 'Accounting by a Customer (Including a Reseller) for Certain Consideration Received from a Vendor,' by Resellers to Sales Incentives Offered to Consumers by Manufacturers"

  4. Issue No. 03-9, "Evaluating the Criteria in Subparagraph 11(d) of FASB Statement No. 142, Goodwill and Other Intangible Assets, Regarding Renewal or Extension When Determining the Useful Life of an Intangible Asset"

  5. Issue No. 03-6, "Participating Securities and the Two-Class Method under FASB Statement No. 128, Earnings per Share"

  6. Issue No. 03-11, "Reporting Gains and Losses on Derivative Instruments That Are Subject to FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, and Not Held for Trading Purposes"

  7. Issue No. 03-7, "Accounting for the Settlement of the Equity-Settled Portion of a Convertible Debt Instrument That Permits or Requires the Conversion Spread to Be Settled in Stock (Instrument C of Issue 90-19)."

In addition, as discussed at the May 15, 2003 EITF meeting, the Task Force will affirm a codification of the guidance in EITF Issue No. 86-12, "Accounting by Insureds for Claims-Made Insurance Policies," EITF Issue No. 03-3, "Applicability of EITF Abstracts, Topic No. D-79, 'Accounting for Retroactive Insurance Contracts Purchased by Entities Other Than Insurance Enterprises,' to Claims-Made Insurance Policies," and Topic D-79 (and the examples discussed in each of those Issues), into EITF Issue No. 03-8, "Accounting for Claims-Made Insurance and Retroactive Insurance Contracts by the Insured Entity."

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.

July 16, 2003 Board Meeting

Fair value measurement. The Board discussed the scope of the initial phase of the project. The Board generally agreed:

  1. To address at some level the remaining measurement issues identified but not addressed in the former project to replace FASB Statement No. 107, Disclosures about Fair Value of Financial Instruments, prioritizing issues relating to unit of account and reference market, and including issues relating to the measurement of restricted stock.

  2. Not to address issues relating to EITF Issue No. 02-03, “Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management Activities,” (Issue 2) in this project.

The Board asked the staff to consider the need to address other measurement issues in determining amendments to either eliminate or carry forward (codify) fair value measurement guidance in existing accounting pronouncements. The Board also requested that the staff develop a plan prioritizing all remaining issues for purposes of assessing the timing of the project; in particular, whether it will be possible to issue an Exposure Draft on this project concurrently with an Exposure Draft on the business combinations purchase method procedures project.

FASB technical plan. The Board approved for publication in The FASB Report its newly reformatted July 1, 2003 plan for research and technical activities. As outlined in that plan, the Board plans to achieve the following goals in the second half of 2003:

  1. Business combinations—issue Exposure Drafts in the fourth quarter of 2003 on the purchase method procedures, combinations between mutual enterprises, and combinations of not-for-profit organizations projects.

  2. Short-term convergence—issue an Exposure Draft on some issues in the third quarter of 2003.

  3. Stock-based compensation—issue an Exposure Draft in the fourth quarter of 2003.

  4. Disclosures about pension plans—issue an Exposure Draft in the third quarter and a final Statement in the fourth quarter of 2003.

  5. Qualifying special-purpose entities and isolation of transferred assets—analyze comment letters received and hold a public roundtable discussion on August 28 with interested individuals to discuss the FASB Exposure Draft, Qualifying Special-Purpose Entities and Isolation of Transferred Assets. The Board also plans to issue a final Statement in the fourth quarter of 2003.

The Board noted the following other changes to its March 31, 2003 technical plan timetable: removed the timing of Exposure Drafts for its project on criteria of liability extinguishments and its project on financial performance reporting by business enterprises. The Board will discuss the timing of those documents at a later date.

The Board also noted that because of insufficient staffing, certain projects such as disclosures about intangible assets and fresh-start accounting will remain inactive.

FASB STAFF POSITIONS AVAILABLE

A majority of the Board did not object to the release of five FASB Staff Positions (FSPs) that provide guidance on the following provisions of FASB Interpretation No. 46, Consolidation of Variable Interest Entities:

  1. Applicability of Interpretation 46 to entities subject to the AICPA Audit and Accounting Guide, Health Care Organizations

  2. Reporting variable interests in specified assets of variable interest entities as separate variable interest entities

  3. Application of paragraph 5 of Interpretation 46 when variable interests in specified assets of a variable interest entity are not considered interests in the entity under paragraph 12 of the Interpretation

  4. Transition requirements for initial application of Interpretation 46

  5. Calculation of expected losses.

Those FSPs will be effective when posted to the FASB website on or before July 25. The FSPs will remain on the website until they can be incorporated in printed FASB literature.

FUTURE OPEN MEETINGS

The following is a list of open meetings tentatively scheduled through August. 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.

Friday, August 8, 2003—FASB Education Session
Tuesday, August 12, 2003—FASB Board Meeting
Wednesday, August 13, 2003—FASB Board Meeting
Wednesday, August 13, 2003—FASB Education Session
Monday, August 18, 2003—Liaison Meeting with the Risk Management Association
Wednesday, August 20, 2003—FASB Board Meeting
Wednesday, August 20, 2003—FASB Education Session
Monday, August 25, 2003—Liaison Meeting with the New York Society of Security Analysts
Wednesday, August 27, 2003—FASB Board Meeting
Wednesday, August 27, 2003—FASB Education Session
Thursday, August 28, 2003—Open Roundtable on Qualifying Special-Purpose Entities