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Action Alert No. 06-50
December 14, 2006
NOTICE OF MEETINGS
OPEN BOARD MEETING
(Board
meetings are available by audio webcast and telephone.)
Tuesday, December 19, 2006, 9:00 a.m.
- Business
combinations: applying the acquisition method (estimated
3-hour discussion). The Board will discuss the following issues as
part of its redeliberations of the June 2005 Exposure Draft, Business
Combinations:
- Measuring noncontrolling interests at fair value
- Whether fair value is the appropriate measurement attribute for
loans acquired in a business combination
- The initial recognition and subsequent accounting for
contingencies acquired or assumed in a business combination
- Whether business combinations between mutual entities and
cooperatives and business combinations achieved by contract alone or
in the absence of a transaction involving the acquirer should be
accounted for by the acquisition method.
- Quantification of misstatements for the determination of
materiality and correction of errors (estimated 30-minute
discussion). The Board will discuss whether to issue a proposed FSP
or other form of guidance that will address issues relating to the
quantification of errors resulting from the carryover or reversal of
prior-year misstatements. Specifically, the Board will discuss whether
to provide guidance for quantifying errors for the purpose of evaluating
materiality. In addition, the Board will discuss whether to allow a
one-time cumulative-effect adjustment to correct those errors rather
than requiring a restatement of prior-period statements.
- 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.
Wednesday, December 20, 2006, 11:00 a.m.
This Board meeting will follow the open education session and begin
at 11:00 a.m.
- Registration
payment arrangements (estimated 1-hour discussion). The
Board will discuss comments received on proposed FSP EITF 00-19-b,
"Accounting for Registration Payment Arrangements," and decide whether
to proceed with issuing that FSP as final.
- Statement
133 Implementation Issue—application of paragraph 13(b) to securitized
interests in prepayable financial assets (estimated 1-hour
discussion). The Board will discuss comments received on proposed
Implementation Issue B40, "Embedded Derivatives: Application of
Paragraph 13(b) to Securitized Interests in Prepayble Financial Assets,"
and decide whether to proceed with issuing that tentative guidance as
final.
- Fair
value option (estimated 75-minute discussion). The Board
will continue its redeliberations of the proposed guidance in the FASB
Exposure Draft, The Fair Value Option for Financial Assets and
Financial Liabilities, and discuss proposed additional disclosures.
OPEN EDUCATION SESSION
Wednesday, December 20, 2006, 9:00 a.m.
The education session will precede the December 20, 2006 open Board
meeting.
The Board will hold an educational, non-decision-making session to
discuss topics that are anticipated to be discussed at a future Board
meeting. Those topics will be posted to the FASB calendar
four days prior to the education session.
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.
December 6, 2006 Board Meeting
Insurance
risk transfer. The Board discussed the comments received on the
FASB Invitation to Comment, Bifurcation of Insurance and Reinsurance
Contracts for Financial Reporting, and how to proceed with the
project. The Board directed the staff to focus on the following items in
enhancing the current risk transfer guidance:
- Propose editorial changes, principally to FASB Statement No. 113,
Accounting and Reporting for Reinsurance of Short-Duration and
Long-Duration Contracts, to clarify the minimum level of insurance
risk transfer required for a contract to be accounted for as reinsurance
under Statement 113.
- Develop improved insurance and reinsurance disclosure requirements
highlighting (a) how and why the entity uses insurance and reinsurance,
(b) how those contracts are accounted for, (c) any risk-limiting
features included in those contracts, and (d) the effect of those
contracts on the financial statements.
- Clarify that noninsurance company policyholders must evaluate
whether the insurance contracts they hold transfer significant insurance
risk using criteria like those for reinsurance contracts in Statement
113.
Financial
guarantee insurance. The Board discussed the appropriate interest
rate to use and whether that interest rate should be locked in at
inception or updated periodically in discounting the expected present
value of installment premiums (both the asset and the liability),
preclaims liabilities, and claims liabilities. For future installment
premiums, the Board decided to use an interest rate that reflects the
guidance in APB Opinion No. 21, Interest on Receivables and
Payables, and the credit standing of the policyholder (the issuer of
the financial obligation) and to lock in the interest rate at the
inception of the insurance contract. For preclaims liabilities, the Board
decided to use an interest rate that reflects the guidance in Opinion 21
and the financial guarantee insurance entity's credit standing and to lock
in the interest rate when an insured financial obligation is first placed
on the internal surveillance list (also referred to as a watch list). For
claims liabilities, the Board decided to use an interest rate that
reflects the guidance in Opinion 21 and the financial guarantee insurance
entity's credit standing and to lock in a new interest rate when a default
occurs.
Amendment
of FASB Interpretation No. 39 (formerly offsetting receivables or
liabilities recognized upon payment or receipt of cash collateral in
master netting arrangements). The Board discussed the issuance of
a proposed FSP on the amendment of FASB Interpretation No. 39,
Offsetting of Amounts Related to Certain Contracts. The Board
agreed that the proposed FSP should include modifications to
Interpretation 39 to replace references to "forward, interest rate swap,
currency swap, option, and other conditional or exchange contracts" with
"derivative instruments" as that term is defined in FASB Statement No.133,
Accounting for Derivative Instruments and Hedging Activities. The
Board directed the staff to proceed to a draft of the proposed FSP for
vote by written ballot.
FASB DOCUMENTS AVAILABLE
The following documents are available on the FASB website:
FASB
Exposure Draft, Disclosures about Derivative Instruments and
Hedging Activities (December 8, 2006). Comments are requested by March
2, 2007.
Proposed
FSP FIN 39-a, "Amendment of FASB Interpretation No. 39" (December
13, 2006). Comments are requested by January 31, 2007.
FUTURE OPEN MEETINGS
The following is a list of open meetings tentatively scheduled through
February. 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.
Wednesday, December 27, 2006—No FASB Board Meeting or Education
Session scheduled
Wednesday, January 3, 2007—No FASB Board
Meeting scheduled
Wednesday, January 3, 2007—FASB Education
Session
Tuesday, January 9, 2007—Liaison Meeting with the National
Association of College and University Business Officers
Wednesday,
January 10, 2007—FASB Board Meeting
Wednesday, January 10, 2007—FASB
Education Session
Thursday, January 11, 2007—Investors Technical
Advisory Council Meeting
Wednesday, January 17, 2007—FASB Board
Meeting
Wednesday, January 17, 2007—FASB Education
Session
Wednesday, January 24, 2007—FASB Board Meeting
Wednesday,
January 24, 2007—FASB Education Session
Wednesday, January 31,
2007—FASB Board Meeting
Wednesday, January 31, 2007—FASB Education
Session
Thursday, February 1, 2007—Conceptual Framework Measurement
Roundtable
Monday, February 5, 2007—Liaison Meeting with
National Investors Relations Institute
Wednesday, February 7,
2007—FASB Board Meeting
Wednesday, February 7, 2007—FASB
Education Session
Wednesday, February 14, 2007—FASB Board
Meeting
Wednesday, February 14, 2007—FASB Education
Session
Wednesday, February 21, 2007—FASB Board
Meeting
Wednesday, February 21, 2007—FASB Education
Session
Wednesday, February 28, 2007—FASB Board
Meeting
Wednesday, February 28, 2007—FASB Education
Session
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