Revised 6/13/08—See below

Action Alert No. 08-24
June 12, 2008

NOTICE OF MEETINGS

OPEN BOARD MEETING
(Board meetings are available by audio webcast and telephone.)

Wednesday, June 18, 2008, 9:30 a.m.

The Board meeting will begin at 9:30 a.m. instead of 9:00 a.m.

  1. Earnings per share (estimated 30-minute discussion). [REVISED 6/13/08] The Board will discuss the effective date of the proposed Statement on earnings per share considering the expected exposure date and comment period of 120-days.

  2. Financial statement presentation (estimated 2.5-hour discussion). The Board will discuss (a) whether its long-term views on presentation in the statement of comprehensive income should remain in the scope of Phase B and if not, the effect of that scope change on the presentation of other comprehensive income, income taxes, and earnings per share, (b) limiting the extent to which Phase B of the project results in new note disclosures, and (c) issues identified while drafting the discussion document, including the definition of the operating and investing categories and preparation of the reconciliation schedule.

  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 SESSIONS

Wednesday, June 18, 2008, 8:00 a.m.
Wednesday, June 18, 2008, following the Board meeting

The Board will hold educational, non-decision-making sessions 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 sessions.

OPEN FAF/FASB FORUM ON HIGH-QUALITY GLOBAL ACCOUNTING STANDARDS: ISSUES AND IMPLICATIONS FOR U.S. FINANCIAL REPORTING
(This meeting is available by audio webcast and telephone.)

Monday, June 16, 2008, 9:00 a.m. – 4:00 p.m.

Baruch College
Vertical Campus
55 Lexington Avenue
New York, NY

The Financial Accounting Foundation (FAF) and the FASB will host a forum titled, High-Quality Global Accounting Standards: Issues and Implications for U.S. Financial Reporting. The purpose of the forum is for the FAF and the FASB to open a dialogue with constituents about whether and how to continue to move the U.S. toward high-quality global accounting standards. Panelists will include users of financial statements, representatives of small and large companies both public and private, auditors, regulators, educators, and others representing facets of the U.S. economy that would be affected if there were a move from U.S. Generally Accepted Accounting Principles (GAAP) to International Financial Reporting Standards (IFRS).

People who have preregistered will be able to observe the Forum in person.  Because we have reached maximum capacity of the observer rooms, no more registrations are being accepted.

OPEN MEETING WITH REPRESENTATIVES OF THE FINANCIAL EXECUTIVES INTERNATIONAL

Thursday, June 19, 2008, 3:30 – 5:30 p.m.

Westin Stamford
1 Stamford Place
Stamford, Connecticut

The Board will meet with representatives of the Financial Executives International Committee on Corporate Reporting 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, FSP, or Statement 133 Implementation Issue.

June 4, 2008 Board Meeting

Statement 140 implementation: transfers of financial assets. The Board decided to postpone voting on a rule that sets a minimum third-party investment threshold to recognize a sale of a transferred financial asset. The Board will redeliberate this issue when it concludes on whether and how to amend the consolidation model in FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities. The Board also deliberated exceptions for a guaranteed mortgage securitization (GMS) that require a transferor to recharacterize a mortgage loan to a security and to recognize a servicing asset or liability as a result of a securitization in which the transferor does not meet the requirements for sale accounting and retains all of the resulting securities. The Board decided to delete the exception that requires a transferor to reclassify interests received in a GMS transaction if the transfer does not qualify as a sale. The Board also decided to remove the exception for GMS transactions currently in FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, that requires a transferor to recognize a servicing asset or liability if the transfer does not qualify as a sale.

Reconsideration of Interpretation 46(R) and Statement 140 implementation: transfers of financial assets. The Board discussed enhancements to the existing disclosure requirements in both Statement 140 and Interpretation 46(R). Subject to drafting changes, the Board voted on the following disclosure amendments:

Statement 140

  1. To provide an overall objective for the disclosure requirements

  2. To include aggregation guidance for similar transfers

  3. To require additional information about a transferor’s calculations of gains and losses when the transfer involves a special-purpose entity, a transferor’s continuing involvement in transferred financial assets, and liquidity, guarantee, and other commitments provided by third parties, and other amendments

  4. To provide a definition of continuing involvement in the glossary

  5. To require that the disclosure in paragraph 17(c) apply to all transfers within the scope of Statement 140

  6. To eliminate explicit references to the methodology used in determining fair value as described in paragraphs 17(h)(1) and 17(i)(1)

  7. To eliminate footnote 10, which provides an exception for the disclosures required by paragraph 17(i)(4) if the transferor’s only continuing involvement is servicing.

Interpretation 46(R)

  1. To provide an overall objective for the disclosure requirements

  2. To include aggregation guidance for similar variable interests

  3. To require disclosure of methodologies and processes for applying Interpretation 46(R), and other amendments

  4. To clarify that the disclosures for an enterprise that holds a significant variable interest should be provided (a) when the variable interest is significant to the variable interest entity or (b) when the variable interest is significant to the enterprise

  5. For a sponsor that holds a variable interest, to require disclosure of the same information that is required for an enterprise that holds a significant variable interest in a variable interest entity

  6. To remove the exception from providing the disclosures required by paragraph 23 if the primary beneficiary also holds a majority voting interest

  7. To remove the requirement for significant variable interest holders to disclose when their involvement began with the variable interest entity.

Not-for-profit endowments and UPMIFA. The Board discussed issues raised by respondents to the proposed FASB Staff Position FAS 117-a, Endowments of Not-for-Profit Organizations: Net Asset Classification of Funds Subject to an Enacted Version of the Uniform Prudent Management of Institutional Funds Act, and Enhanced Disclosures. The Board made the following decisions, which will be incorporated into the FSP:

  1. As proposed by FSP FAS 117-a, organizations should continue to classify a portion of a donor-restricted endowment fund as permanently restricted net assets, as determined by the organization’s (governing board’s) interpretation of relevant law.

  2. As proposed by FSP FAS 117-a, organizations should continue to account for underwater funds as a reduction of unrestricted or temporarily restricted net assets (rather than as a reduction of permanently restricted net assets), which is consistent with the guidance in FASB Statement No. 124, Accounting for Certain Investments Held by Not-for-Profit Organizations.

  3. The portion of an endowment fund that is not classified in permanently restricted net assets should be classified as temporarily restricted net assets, even in the absence of purpose restrictions. This decision is consistent with the view that UPMIFA extends a donor restriction to the unappropriated portion of an endowment fund, specifically by implying a time restriction.

  4. The disclosure requirements proposed by FSP FAS 117-a will be retained and incorporated into the final FSP except for the elimination of:

    1. The proposed disclosure of an organization’s planned appropriation for expenditure, if known, for the year following the most recent period for which the organization presents financial statements

    2. The proposed supplemental disclosure to the tabular disclosures of the amount added to permanently restricted net assets because of governing board interpretation of the law.

  5. The final FSP will not address respondents’ requests for additional guidance that are outside the scope of the project.

  6. The effective date of the FSP will be deferred six months to fiscal years ending after December 15, 2008. Early application of the FSP is permitted.

The Board directed the staff to monitor the implementation of UPMIFA and the application of the FSP in practice. The Board also directed the staff to proceed to a draft of a final FSP for vote by written ballot.

FASB DOCUMENT AVAILABLE

FASB Exposure Draft, Accounting for Hedging Activities, was issued on June 6, 2008, and is available on the FASB website. Comments are requested by August 15, 2008.

FUTURE OPEN MEETINGS

The following is a list of open meetings tentatively scheduled through July. 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, June 24, 2008—Financial Accounting Standards Advisory Council Meeting
Wednesday, June 25, 2008—FASB Board Meeting
Wednesday, June 25, 2008—FASB Education Session
Friday, June 27, 2008—Small Business Advisory Committee Meeting
Wednesday, July 2, 2008—FASB Board Meeting
Wednesday, July 2, 2008—FASB Education Session
Wednesday, July 9, 2008—FASB Board Meeting
Wednesday, July 9, 2008—FASB Education Session
Wednesday, July 16, 2008—FASB Board Meeting
Wednesday, July 16, 2008—FASB Education Session
Wednesday, July 23, 2008—FASB Board Meeting
Wednesday, July 23, 2008—FASB Education Session
Wednesday, July 30, 2008—FASB Board Meeting
Wednesday, July 30, 2008—FASB Education Session