Action Alert No. 05-07
February 17, 2005


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

Wednesday, February 23, 2005, 9:00 a.m.

  1. Conceptual Framework. The Board will discuss the proposed plan for updating and completing the FASB's Conceptual Framework and converging it with the IASB's Framework. (Estimated 60-minute discussion.)

  2. FASB Staff Position (FSP): accounting for waste electrical and electronic equipment. The Board will consider whether to direct the staff to post to the FASB website for comment a proposed FSP on accounting for waste electrical and electronic equipment obligations. That proposed FSP addresses accounting issues relating to the European Union's (EU) Directive 2002/96/EC on Waste Electrical and Electronic Equipment. The Directive was enacted on February 13, 2003, and directs EU-member countries to adopt legislation to regulate the collection, treatment, recovery, and environmentally sound disposal of waste equipment. (Estimated 60-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, February 23, 2005, immediately 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 March 2, 2005 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 or Interpretation.

February 9, 2005 Board Meeting

FASB Staff Positions (FSPs). The Board discussed the following proposed and potential FSPs:

FSP EITF 85-24-a. The Board discussed issues related to proposed FSP EITF 85-24-a, "Application of EITF Issue No. 85-24, 'Distribution Fees by Distributors of Mutual Funds That Do Not Have a Front-End Sales Charge,' When Cash for the Right to Future Distribution Fees for Shares Previously Sold Is Received from Third Parties," and made the following decisions:

  1. The final FSP should be clarified to indicate that indemnities requiring maintenance of the nature of the Rights as they existed at the time of transfer would preclude revenue recognition. Likewise, indemnities restricting changes to service providers and fund objectives would preclude revenue recognition.

  2. Certain other requests for clarification in comment letters received on the proposed FSP should be made in the final FSP.

  3. The transition provisions of the proposed FSP should be revised such that the FSP will be applicable in the first fiscal quarter after posting of the final FSP to the FASB website based on terms in existence in transaction documents as of June 30, 2005.

The Board directed the staff to post the final FSP to the FASB website.

Financial instruments: stable value investment funds. The Board provided direction for the staff in drafting a proposed FSP to address issues related to the accounting for certain fully benefit-responsive investment contracts held by certain investment companies. The Board reconfirmed that fair value is the appropriate amount at which to measure all investments and derivatives of an investment company. However, the Board was supportive of contract value accounting being appropriate for fully benefit-responsive investment contracts held by certain entities in limited circumstances coupled with enhanced disclosure of the investment contracts. The Board asked the staff to prepare a draft of the proposed FSP for discussion at a future Board meeting that includes the following:

  1. The criteria and limited circumstances under which contract value accounting treatment would be appropriate

  2. A description of the enhanced quantitative and qualitative disclosures required if contract value is used.

The Board recommended that the staff utilize guidance in AICPA Statement of Position 94-4, Reporting of Investment Contracts Held by Health and Welfare Plans and Defined-Contribution Pension Plans, in drafting the proposed FSP.

Accounting for the loss of significant influence in an investee. The Board directed the staff to post a proposed FSP to the FASB website on accounting by an investor for other comprehensive income of an investee accounted for under the equity method upon a loss of significant influence. The Board decided that the proposed FSP should be applied prospectively (without requiring the recording of an adjustment for the cumulative effect of a change in accounting principle) regardless of the method that has been applied historically. The Board directed the staff to post the proposed FSP to the FASB website for a comment period of 60 days. The Board approved an effective date of the first reporting period beginning after the final FSP is posted to the FASB website.


The following is a list of open meetings tentatively scheduled through March. All meetings are held in Norwalk, Connecticut, unless otherwise noted. 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, March 2, 2005—FASB Board Meeting
Wednesday, March 2, 2005—FASB Education Session
Tuesday, March 8, 2005—User Advisory Council Meeting, New York City
Wednesday, March 9, 2005—FASB Board Meeting
Wednesday, March 9, 2005—FASB Education Session
Wednesday, March 16, 2005—FASB Board Meeting
Wednesday, March 16, 2005—FASB Education Session
Thursday, March 17, 2005—Emerging Issues Task Force Meeting
Tuesday, March 22, 2005—Financial Accounting Standards Advisory Council
Wednesday, March 23, 2005—FASB Board Meeting
Wednesday, March 23, 2005—FASB Education Session
Wednesday, March 30, 2005—FASB Board Meeting
Wednesday, March 30, 2005—FASB Education Session