Action Alert No. 05-35
September 1, 2005


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

Wednesday, September 7, 2005, 9:00 a.m.

  1. Variable interest entities. The Board will discuss whether to issue a draft of a proposed FSP on determining the variability to be considered when applying FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities. (Estimated 60-minute discussion.)

  2. Other-than-temporary impairment. The Board will discuss whether to provide transition for the accounting for debt securities subsequent to an other-than-temporary impairment and whether to proceed with drafting the final FSP. (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.


Wednesday, September 7, 2005, 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 14, 2005 Board meeting. Those topics will be posted to the FASB calendar four days prior to the education session.


Friday, September 9, 2005, 12:30 p.m.

The Board will meet with representatives of the Corporate Disclosure Policy Committee of the CFA Institute to discuss matters of mutual interest.


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 or Interpretation.

August 24, 2005 Board Meeting

GAAP hierarchy. The Board reconsidered certain aspects of the April 28, 2005 FASB Exposure Draft, The Hierarchy of Generally Accepted Accounting Principles. In response to comments raised by constituents, the Board reconsidered and subsequently affirmed its previous decisions on the following:

  1. The language in footnote 1 related to the SEC literature should remain unchanged.

  2. The Rule 203 exception should not be carried forward from AICPA Statement on Auditing Standards No. 69, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.

  3. EITF consensuses should remain in category (c) in the GAAP hierarchy.

  4. FASB Staff Positions (FSPs), Statement 133 Implementation Issues, and Technical Bulletins should remain unchanged from the Exposure Draft.

Additionally, in response to comments raised by constituents, the Board decided on the following changes to the Exposure Draft:

  1. Paragraph 5 of the Exposure Draft should be amended as follows:

    If the accounting treatment for a transaction or event is not specified by a pronouncement or practice described in categories (a)–(d), an enterprise shall first consider accounting principles for similar transactions or events within categories (a)–(d) and then other accounting literature.

  2. AICPA Industry Audit and Accounting Guides that have not been cleared by the Board should be included in category (d) of the GAAP hierarchy.

  3. The effective date will be consistent with the effective dates of the AICPA and PCAOB documents and will be determined by the staff when the final release date of the other documents is known.

  4. In the rare instance that application of the final Statement results in a change in accounting, enterprises should account for this as a change in accounting principle in accordance with FASB Statement No. 154, Accounting Changes and Error Corrections. Enterprises should clearly disclose the accounting principle that was used both before and after the application of the provisions of the final Statement. Additionally, enterprises should disclose the reason why applying the Statement resulted in a change in accounting principle.

The Board also agreed to several minor wording changes to the final Statement.


The FASB and the IASB will hold public roundtable discussions with respondents to their June 30, 2005 Exposure Drafts, Business Combinations, and Consolidated Financial Statements, Including Accounting and Reporting of Noncontrolling Interests in Subsidiaries. Those discussions are scheduled for Thursday, October 27, 2005, in Norwalk, Connecticut, and Wednesday, November 9, 2005, in London, England. All FASB members and certain IASB Board members are expected to participate in the Norwalk roundtables. All IASB members and certain FASB members are expected to participate in the London roundtables.

Individuals or organizations interested in participating in the roundtable discussions should submit a request to participate via email to by September 15, 2005. That request must specify the date and location of the preferred roundtable and the name, title, affiliation, telephone number, and email address of the individual that will participate. Due to space limitations, participation is limited to one individual per organization. Organizations wishing to participate in both roundtables may request to do so and, depending on space availability, may be invited to participate in both discussions.

Individuals and organizations that want to participate in the roundtable discussions are required to submit their comment letter on the Exposure Drafts or a summary of key issues that will be raised in their comment letter by September 23, 2005. We will use the draft comments and summaries solely for the purposes of the roundtable and selecting participants.

The FASB will notify individuals about their selection status by September 30, 2005.


Final FSP FAS 123(R)-1, “Classification and Measurement of Freestanding Financial Instruments Originally Issued in Exchange for Employee Services under FASB Statement No. 123(R),” was issued on August 31, 2005, and is available on the FASB website.


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.

Monday, September 12, 2005—FASB Credit Worthiness Resource Group Meeting
Wednesday, September 14, 2005—FASB Board Meeting
Wednesday, September 14, 2005—FASB Education Session
Thursday, September 15, 2005—FASB Emerging Issues Task Force Meeting
Monday, September 19, 2005—Liaison Meeting with the AICPA PCPS Technical Issues Committee
Wednesday, September 21, 2005—FASB Board Meeting
Wednesday, September 21, 2005—No FASB Education Session Scheduled
Thursday, September 22, 2005—Financial Accounting Standards Advisory Council Meeting
Friday, September 23, 2005—Liaison Meeting with the Institute of Management Accountants
Wednesday, September 28, 2005—FASB Board Meeting
Wednesday, September 28, 2005—FASB Education Session
Thursday, September 29, 2005—User Advisory Council Meeting, New York City