Action Alert No. 08-19
May 8, 2008
NOTICE OF MEETINGS
OPEN BOARD MEETING
meetings are available by audio webcast and telephone.)
Wednesday, May 14, 2008, 9:00 a.m.
recognition (estimated 90-minute discussion). The Board
will discuss a draft chapter of the discussion paper that examines two
alternative measurement approaches (current exit price and customer
consideration) for the proposed revenue recognition model. The Board
will be asked to express a preliminary view in favor of one of these
measurement approaches or a hybrid of the two approaches.
discontinued operations (estimated 60-minute discussion).
The Board will discuss the proposed converged definition (with the IASB)
of a discontinued operation and related disclosures for all components
of an entity that have been (or will be) disposed of. The Board also
will discuss any remaining issues, including effective date and
transition, and whether to proceed to a draft of a proposed FSP.
- 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 SESSION
Wednesday, May 14, 2008, following the 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.
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.
April 30, 2008 Board Meeting
about credit derivatives. The Board decided to amend FASB
Statement No. 133, Accounting for Derivative Instruments and Hedging
Activities, to require disclosures about credit derivatives that would
be similar to the disclosures currently required to be made by guarantors
under FASB Interpretation No. 45, Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness
of Others. The Board also decided to amend Interpretation 45 to
require an additional disclosure about the current status of the guarantee
(for example, the current credit risk of the underlying guaranteed
obligation). Further, the Board decided that the proposed FSP be effective
for all fiscal years and interim periods ending after November 15, 2008,
and that the comment period for the proposed FSP be 30 days. Finally, the
Board directed the staff to proceed to a draft of a proposed FSP for vote
by written ballot.
133 hedging. The Board discussed three technical issues that arose
while drafting the Exposure Draft of the proposed Statement to amend the
hedging guidance in Statement 133 and made the following decisions:
- When calculating the fair value of the perfect derivative in a cash
flow hedge, an entity should use the credit risk adjustment for the
nonperformance risk of the party in a liability position that is used
for calculating the fair value of the actual derivative hedging
- If an entity designates a group of transactions expected to occur
within a specific time frame as the hedged forecasted transaction in a
cash flow hedge (such as the variability in cash flows on the first $1
million of sales proceeds to be received in January), the perfect
derivative could be a derivative that settles on a single date if the
hedge ineffectiveness that is expected to result from the timing
differences between settlement of the actual derivative and the
forecasted transaction is minimal.
- If an entity designates a purchased option as the hedging instrument
in a cash flow hedge to provide one-sided offset against the hedged
risk, the perfect derivative used for measuring ineffectiveness could be
an option that includes total changes in the option's cash flows. The
initial time value component of the option's fair value should be
reclassified to earnings on a rational basis.
The Board decided that the proposed Statement should be effective for
fiscal years beginning after June 15, 2009, and interim periods within
those fiscal years and that earlier application not be permitted.
Additionally, the Board decided that the Exposure Draft should have a
comment period ending August 15, 2008.
acquisitions by a not-for-profit organization. The Board approved
an updated plan for its redeliberations and completion of the project by
the end of 2008. As part of that plan, the Board agreed to:
- Continue with the existing plan of limiting the Board's substantive
redeliberations to significant issues for which new information has
arisen. Those issues include (a) differing accounting methods for
mergers and acquisitions, (b) donor-related intangible assets (for
example, donor lists and relationships), (c) initial recognition of
goodwill or a contribution received, and (d) subsequent impairment
testing of goodwill.
- Adhere to the scope and not address requests for more guidance or
concerns about other GAAP that are outside the scope of the project,
such as a request that the Board address perceived deficiencies in
consolidation guidance applicable to not-for-profit organizations.
- Continue to adhere to the difference-based approach and affirmed
that the Statement 141(R) post-Exposure Draft changes are to apply to
acquisitions by not-for-profit organizations.
- Redirect the staff to conduct additional constituent outreach to
solicit additional information about the workability of the "ceding
control" notion for purposes of distinguishing a merger from an
acquisition or other transactions outside the scope of the merger and
acquisition proposal. The Board also agreed to utilize more efficient
means for gathering that information rather than issuing a revised
Agenda decision announcement—definition of a public company. The
FASB chairman announced that phase 2 of the project to consider the
definition of a public company was removed from the Board's agenda because
of cost-benefit considerations. The chairman indicated that the project
was originally added to the agenda based on a recommendation from the
AICPA Healthcare expert panel. The first phase of the project resulted in
the issuance of FSP FAS 126-1, Applicability of Certain Disclosure and
Interim Reporting Requirements for Obligors for Conduit Debt
Securities. The goal of phase 2 of the project was to create a single
definition of a public company to be used throughout GAAP.
FASB DOCUMENT AVAILABLE
ARB 43-a, Amendment of the Inventory Provisions of Chapter 4 of
ARB No. 43, was issued on May 1, 2008, and is available on the FASB
website. Comments are requested by June 16, 2008.
FUTURE OPEN MEETINGS
The following is a list of open meetings tentatively scheduled through
June. 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, May 21, 2008—FASB Board Meeting
Wednesday, May 21,
2008—FASB Education Session
Thursday, May 22, 2008—Liaison Meeting with
Healthcare Financial Management Association
Wednesday, May 28,
2008—FASB Education Session
Wednesday, June 4, 2008—FASB Board
Wednesday, June 4, 2008—FASB Education Session
10, 2008—Investors Technical Advisory Committee Meeting
11, 2008—FASB Board Meeting
Wednesday, June 11, 2008—FASB Education
Thursday, June 12, 2008—Emerging Issues Task Force
Monday, June 16, 2008—FAF/FASB Forum on High-Quality Global
Accounting Standards: Issues and Implications for U.S. Financial
Reporting, New York City
Wednesday, June 18, 2008—FASB Board
Wednesday, June 18, 2008—FASB Education Session
June 19, 2008—Liaison Meeting with Financial Executives International,
Tuesday, June 24, 2008—Financial Accounting Standards
Advisory Council Meeting
Wednesday, June 25, 2008—FASB Board
Wednesday, June 25, 2008—FASB Education Session
27, 2008—Small Business Advisory Committee