Action Alert No. 07-36
September 6, 2007


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

No Board meetings are planned for the week of September 10, 2007. The next scheduled Board meeting is Wednesday, September 19, 2007, and will be announced in next week’s issue of Action Alert.


Wednesday, September 12, 2007, 9:00 a.m.

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.

(This meeting is available by audio webcast and telephone.)

Tuesday, September 11, 2007, 9:00 a.m. – 3:45 p.m.

The Task Force plans to discuss all of the following issues in the order shown:

  1. Issue No. 07-5, "Determining Whether an Instrument (or an Embedded Feature) Is Indexed to an Entity's Own Stock"

  2. Issue No. 07-4, "Application of the Two-Class Method under FASB Statement No. 128 to Master Limited Partnerships"

  3. Issue No. 07-6, "Accounting for the Sale of Real Estate When the Agreement Includes a Buy-Sell Clause"

  4. Issue No. 07-1, "Accounting for Collaborative Arrangements."

(This meeting is available by audio webcast and telephone.)

Friday, September 14, 2007, 9:00 a.m. – 5:00 p.m.

Some members of the FASB and IASB will meet with members of its two advisory groups on financial statement presentation: the Joint International Group and the Financial Institutions Advisory Group.  Topics to be discussed include:

  1. An overview of the preliminary model for financial statement presentation

  2. The statement of comprehensive income

  3. The statement of cash flows and related reconciliation of the statement of cash flows to the statement of comprehensive income

  4. Possible additional segment disclosures

  5. A brief report on the recent recasting exercise and input from participants in that exercise.


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.

August 29, 2007 Board Meeting

Conceptual framework: objectives and qualitative characteristics. The Board redeliberated issues related to its Preliminary Views, Conceptual Framework for Financial Reporting: Objective of Financial Reporting and Qualitative Characteristics of Decision-Useful Financial Reporting Information. Specifically, the Board addressed (1) concerns raised by respondents about the role of stewardship in the objective of financial reporting and (2) the logical flow of Chapter 1 of the Preliminary Views. The Board decided the following:

  1. The objective of general purpose external financial reporting is to provide financial information about the reporting entity that is useful to present and potential investors and creditors in making decisions in their capacity as capital providers.

  2. Chapter 1 of the Exposure Draft should be structured as follows so that it flows logically from the premise that the basic perspective of financial reporting is that of the entity.

    1. The basic perspective underlying financial reporting is the perspective of the reporting entity.

    2. That entity perspective involves reporting on the entity’s resources (assets), the claims on the entity’s resources (liabilities and equity), and the changes in them.

    3. The primary user group comprises those who have a claim (or potentially may have a claim) on the entity’s resources—its present and potential equity investors and creditors (capital providers). The objective of financial reporting is focused on meeting the information needs of the primary user group.

    4. The primary user group is interested in financial information because that information is useful in the decision making of investors and creditors in their capacity as capital providers.

    5. The decisions made by investors and creditors include resource allocation decisions as well as decisions relating to protecting or enhancing their claim on the resources of an entity.

    6. Investors and creditors use information about an entity’s resources, claims to those resources, and changes in resources and claims as inputs into the decision-making process.

    7. Other potential user groups may benefit from financial reporting information, but they are not the focus of the objective.

Postretirement benefit obligations including pensions. Both the FASB and the IASB have a comprehensive project on postretirement benefits on their agendas. Like the FASB, the IASB is conducting its project in phases. While the FASB completed its narrowly scoped first-phase project in 2006, the IASB’s first-phase project is in process. That project will narrowly address two specific issues—(1) measurement of plan obligations that are defined-return promises (which include so-called cash balance plans) and (2) off-balance-sheet reporting including presentation of the components of postretirement benefit costs within the current reporting framework in IAS 1, Presentation of Financial Statements. The IASB’s aim is to issue an interim standard that would significantly improve pension accounting by 2010.

The FASB discussed how to proceed with the next phase of its broad project on accounting for postretirement benefits, in particular, how it and the IASB might achieve their goal of improving and converging the accounting in this area, in light of the differing scopes and stages of their phase 1 projects. The FASB decided to proceed with an approach that would leverage the respective resources of the FASB and the IASB. Under this approach, the Boards will initially work separately, focusing on different, but important aspects of employers’ accounting for postretirement benefits. Key features of that approach follow.

  1. The FASB will leverage the IASB’s work on measurement of plan obligations that contain defined return promises. That is, once the IASB completes development of its new standard, the FASB will consider whether adopting similar measurement requirements would improve reporting in the United States. The Boards would then consider together how they might converge and improve the measurement of other types of plan obligations. The FASB noted that if the IASB’s first phase project expands to address measurement issues more broadly, it may want to consider joining in that broader effort.

  2. The FASB will take the lead in addressing the following issues. Once the FASB work is completed, it expects the IASB would consider whether adopting similar changes would improve reporting internationally.

    1. How changes in postretirement benefit assets and obligations should be reported in the context of the presentation framework and principles being developed in the joint financial statement presentation project. That is, the Board will identify the discrete items that cause changes in plan assets and benefit liabilities and analyze how each item should be presented, in the period they occur, within the framework of the joint financial statement presentation project. That framework presumes that the concepts of other comprehensive income and recycling have been eliminated. Once those standards are developed, the Board will consider whether some or all of them should be implemented before the financial statement presentation project is completed and any new standards are effective.

    2. How the reporting of an employer’s obligations associated with participation in a multiemployer plan might be improved. The Board expressed tentative support for the staff recommendation that this phase initially focus on improving disclosures in the notes to financial statements, pending additional staff analysis of reasons for that recommendation (that is, the staff’s rationale for initially focusing on disclosure rather than recognition and measurement of plan obligations).

    3. Whether and how to improve disclosures about risks inherent in plan investments, for example, sponsor’s use of derivatives. This step would reexamine the guidance in FASB Statement No. 132 (revised 2003), Employers’ Disclosures about Pensions and Other Postretirement Benefits.


Proposed FSP APB 14-a, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement),” was issued on August 31, 2007, and is available on the FASB website. Comments are requested by October 15, 2007.


The following is a list of open meetings tentatively scheduled through October. 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, September 19, 2007—FASB Board Meeting
Wednesday, September 19, 2007—FASB Education Session
Wednesday, September 26, 2007—FASB Board Meeting
Wednesday, September 26, 2007—FASB Education Session
Thursday, September 27, 2007—Liaison Meeting with the Institute of Management Accountants
Wednesday, October 3, 2007—FASB Board Meeting
Wednesday, October 3, 2007—FASB Education Session
Friday, October 5, 2007—Liaison Meeting with the AICPA Private Companies Practice Section, Technical Issues Committee
Wednesday, October 10, 2007—FASB Board Meeting
Wednesday, October 10, 2007—FASB Education Session
Wednesday, October 17, 2007—FASB Board Meeting
Wednesday, October 17, 2007—FASB Education Session
Monday, October 22, 2007—FASB/IASB Joint Board Meeting, Norwalk, CT
Tuesday, October 23, 2007—FASB/IASB Joint Board Meeting, Norwalk, CT
Wednesday, October 24, 2007—FASB/IASB Joint Board Meeting, Norwalk, CT
Wednesday, October 31, 2007—FASB Board Meeting
Wednesday, October 31, 2007—FASB Education Session