Action Alert No. 06-33
August 17, 2006


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

No Board meetings are planned for the week of August 21, 2006. The next scheduled Board meeting is Wednesday, August 30, 2006, and topics for that meeting will be announced in next week’s issue of Action Alert.


Wednesday, August 23, 2006, 9:00 a.m.

The Board will hold an educational, non-decision-making session to discuss topics that are anticipated to be discussed at the August 30, 2006 Board meeting. Those topics will be posted to the FASB calendar four days prior to the education session.


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.

August 9, 2006 Board Meeting

Financial guarantee insurance. The Board decided to explore further a claims recognition approach for financial guarantee insurance contracts that would value the stand-ready loss liability using only certain transaction-specific inputs, such as the credit rating of the underlying insured security and the time value of money. The Board noted that consideration of revenue recognition approaches in conjunction with the claims recognition approach is necessary before concluding on the appropriate claims recognition approach.

GAAP hierarchy. The Board discussed certain GAAP hierarchy issues that were raised by constituents subsequent to redeliberations of the FASB Exposure Draft, The Hierarchy of Generally Accepted Accounting Principles. The Board decided that:

  1. The grandfathering provisions related to EITF Issues and Statements of Position in AICPA Statement on Auditing Standards No. 69, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles, should not be included in the final Statement.

  2. EITF D-Topics will be explicitly included in category (c) of the GAAP hierarchy. Additionally, a footnote will be added that states that SEC observer comments are accounting principles for SEC registrants.

  3. A "near-final" version of the final Statement, including all of the Board’s decisions made during redeliberations, will be posted to the website.


At its August 3, 2006 meeting, the EITF Agenda Committee discussed the following eight potential new issues and made the following decisions:

  1. Accounting for Stock Options and Warrants in the Determination of Basic Earnings per Share Pursuant to Paragraph 10 of FASB Statement No. 128, Earnings per Share—The Agenda Committee agreed to defer making a decision on this potential new issue pending a decision on the Committee's recommendation that the FASB and the IASB consider including this issue as part of the short-term international convergence project on earnings per share.

  2. Reporting the Elimination of Previously Existing Differences between the Fiscal Year-End of a Parent Company and Those of Its Consolidated Subsidiaries—This issue was added to the EITF agenda.

  3. Application of the Assessment of a Continuing Investment in Paragraph 12 of FASB Statement No. 66, Accounting for Sales of Real Estate, to a Sale of a Condominium—This issue was added to the EITF agenda.

  4. Application of FASB Statement No. 123 (revised 2004), Share-Based Payment, to Book Value Employee Stock Purchase Plans When a Nonpublic Entity Becomes a Public Entity—The Agenda Committee decided not to add this issue to the EITF's agenda. Based on a request from the Committee, the FASB staff agreed to pursue the issuance of an FASB Staff Position to provide guidance on this issue.

  5. Application of AICPA Audit and Accounting Guide, Brokers and Dealers in Securities, to Entities That Engage in Commodity Trading Activities—This issue was added to the EITF agenda.

  6. Accounting for Joint Development, Manufacturing, and Marketing Arrangements in the Biotechnology and Pharmaceutical Industries—This issue was added to the EITF agenda.

  7. Subsequent Accounting for Executory Contracts Acquired in a Business Combination Initially Recorded at Fair Value under EITF Issue No. 03-17, "Subsequent Accounting for Executory Contracts That Have Been Recognized on an Entity's Balance Sheet"—The Agenda Committee agreed to recommend to the Task Force that it continue deliberations on this issue.

  8. Accounting for the Deferred Compensation and Postretirement Aspects of Collateral Assignment Split-Dollar Life Insurance Arrangements—The Agenda Committee agreed to defer making a decision on this potential new issue pending the outcome of EITF Issue No. 06-4, "Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements."


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, August 28, 2006—Liaison Meeting with Edison Electric Institute and American Gas Association
Wednesday, August 30, 2006—FASB Board Meeting
Wednesday, August 30, 2006—FASB Education Session
Wednesday, September 6, 2006—FASB Board Meeting
Wednesday, September 6, 2006—FASB Education Session
Thursday, September 7, 2006—Emerging Issues Task Force Meeting
Tuesday, September 12, 2006—Liaison Meeting with the AICPA Accounting Standards Executive Committee
Wednesday, September 13, 2006—FASB Board Meeting
Wednesday, September 13, 2006—FASB Education Session
Tuesday, September 19, 2006—Liaison Meeting with Institute of Management Accountants
Wednesday, September 20, 2006—FASB Board Meeting
Wednesday, September 20, 2006—FASB Education Session
Thursday, September 21, 2006—Financial Accounting Standards Advisory Council Meeting
Wednesday, September 27, 2006—FASB Board Meeting
Wednesday, September 27, 2006—FASB Education Session
Friday, September 29, 2006—Liaison Meeting with the AICPA PCPS Technical Issues Committee