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Action Alert No. 05-48
December 1, 2005
NOTICE OF MEETINGS
OPEN BOARD MEETING
(Board
meetings are available by audio webcast and telephone.)
Wednesday, December 7, 2005, 9:00 a.m.
- Transfers of
financial assets. The Board will discuss whether it agrees with
the listing of issues to be redeliberated identified through the staff’s
analysis of comment letters received on its Exposure Draft,
Accounting for Transfers of Financial Assets. The Board also will
address the timing of the issuance of the final Statement and whether
the Board wishes to address the issue of measurement of beneficial
interests in connection with its project on servicing rights or whether
it wishes to continue to address it in connection with this transfers
project. (Estimated 90-minute discussion.)
- Financial
performance reporting by business entities. The Board will
discuss whether to proceed with the issuance of an Exposure Draft of a
proposed Statement relating to the issues in Segment A of this project.
(Estimated 45-minute discussion.)
- Nontraditional
loan products. The Board will discuss comment letters received
on proposed FSP SOP 94-6-a, "Nontraditional Loan Products." The Board
will focus on issues concerning the definition of a nontraditional loan
product and the transition provisions for the final FSP. (Estimated
45-minute discussion.)
- Fair value
option. The Board will discuss several issues regarding the fair
value option, including disclosures and the effective date and
transition provisions. (Estimated 60-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 SESSIONS
Wednesday, December 7, 2005, following the Board
meeting
Thursday, December 8, 2005, 9:00 a.m.
The Board will hold educational, non-decision-making sessions to
discuss topics that are anticipated to be discussed at the December 14,
2005 Board meeting. Those topics will be posted to the FASB calendar four
days prior to the education session.
OPEN MEETING WITH REPRESENTATIVES OF THE NEW YORK SOCIETY OF
SECURITY ANALYSTS
Thursday, December 8, 2005, 1:00 p.m.
The Board will meet with representatives of the Committee for Improved
Corporate Reporting of the New York Society of Security Analysts 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 roundtable discussions, and
through other communication channels. Decisions become final only after a
formal written ballot to issue a final Statement, Interpretation, or
FSP.
November 22, 2005 Board Meeting
Uncertain tax positions. The Board decided:
- The provisions of the final Interpretation will apply broadly to all
tax positions taken by an enterprise.
- It will not deliberate issues concerning the uncertainty over new
legislation in this project.
- The final Interpretation will not prescribe a specific unit of
account to be used by an enterprise. The final Interpretation will
indicate that the appropriate unit of account is a matter of facts and
circumstances and should be based on the manner in which the enterprise
supports and documents its tax return and the level at which issues are
addressed with taxing authorities.
- An entity should presume that a taxing authority will examine a tax
position when evaluating the position for recognition and measurement;
therefore, consideration of the risk of examination is not appropriate.
- It will adopt a benefit recognition model with a two-step approach,
a more-likely-than-not recognition criterion, and a best-estimate
measurement attribute. In applying the provisions of the Interpretation,
there will be distinct recognition and measurement evaluations. The
first step is evaluating the tax position for recognition by determining
if the weight of available evidence indicates it is more likely than
not, based solely on the technical merits, that the position will be
sustained on audit, including resolution of related appeals or
litigation processes, if any. The second step is the measurement of the
appropriate amount of the benefit to recognize. The amount of benefit to
recognize will be measured using the best estimate of the amount that
will be sustained. The term best estimate is used consistent with
the use of the term in FASB Concepts Statement No. 7, Using Cash Flow
Information and Present Value in Accounting Measurements, which is
similar to the statistical mode. The tax position should be derecognized
when it is no longer more likely than not of being sustained.
Fair value option. The Board discussed several issues pertaining
to the scope of the project and election of the fair value option. The
Board decided:
- The project should be split into two phases. Phase one will address
creating a fair value option for financial assets and financial
liabilities. Phase two will address creating a fair value option for
selected nonfinancial items.
- The liability for income taxes (both current and deferred) should be
explicitly excluded from the scope of the project.
- Forward contracts that involve only financial instruments and that
would otherwise not be recognized at inception under existing generally
accepted accounting principles should not be excluded from the scope of
the project’s first phase.
- The fair value option election can be applied by nonpublic entities
that have elected the exception in FASB Statement No. 126, Exemption
from Certain Required Disclosures about Financial Instruments for
Certain Nonpublic Entities, from being required to disclose the fair
value of all financial instruments.
The Board also affirmed that the fair value option election should be
made upon initial recognition of the applicable financial asset or
financial liability, is irrevocable, and should be documented
concurrently. The application of new basis accounting would constitute the
initial recognition of a financial asset or liability.
EITF ANNOUNCEMENT
At its November 22, 2005 meeting, the EITF Agenda Committee
added a new issue to the EITF Agenda on accounting for the deferred
compensation and postretirement benefit aspects of split-dollar life
insurance arrangements.
The Committee also decided not to reconsider EITF Issue No.
04-6, "Accounting for Stripping Costs Incurred during Production in the
Mining Industry." However, the Agenda Committee agreed with the FASB staff
that the production period does not yet commence if only incidental
mineral material has been removed. Therefore, the FASB staff will clarify
the language in Issue 04-6 to address the removal of overburden and waste
that includes incidental mineral material.
In addition, the Agenda Committee decided to cancel the January 6, 2006
EITF meeting due to an insufficient number of agenda items. The next
scheduled meeting of the EITF is March 15-16, 2006.
FUTURE OPEN MEETINGS
The following is a list of open meetings tentatively scheduled through
January. 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, December 13, 2005—FASB Education Session
Wednesday,
December 14, 2005—FASB Board Meeting
Wednesday, December 14, 2005—FASB
Education Session
Tuesday, December 20, 2005—FASB Board
Meeting
Wednesday, December 21, 2005—FASB Board Meeting
Wednesday,
December 21, 2005—FASB Education Session
Wednesday, December 28,
2005—No FASB Board Meeting or Education Session
scheduled
Wednesday, January 4, 2005—FASB Board
Meeting
Wednesday, January 4, 2006—FASB Education Session
Wednesday,
January 11, 2006—FASB Board Meeting
Wednesday, January 11, 2006—FASB
Education Session
Wednesday, January 18, 2006—FASB Board
Meeting
Wednesday, January 18, 2006—FASB Education
Session
Wednesday, January 25, 2006—FASB Board Meeting
Wednesday,
January 25, 2006—FASB Education Session |
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