Summary of Board decisions 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 an Accounting Standards Update.

June 27, 2012 FASB Board Meeting

Transfers and servicing: repurchase agreements and similar transactions.

Accounting for Repurchase Agreements Involving Identical Financial Assets

The Board discussed the accounting for repurchase agreements that have all of the following characteristics:
  1. The agreement involves a transfer of existing financial assets at the inception.
  2. The agreement involves both a right and an obligation to repurchase the financial assets.
  3. The initial transfer and forward repurchase agreement involve the same counterparty.
  4. The agreement to repurchase the financial assets is entered into contemporaneously, or in contemplation of, the initial transfer.
  5. The repurchase price is fixed or readily determinable.
  6. The financial assets specified under the forward repurchase agreement are identical to the financial assets transferred at the inception
The Board discussed both repurchases before maturity and repo-to-maturity transactions.

The Board considered several approaches for identifying the types of arrangements that should be accounted for as secured borrowings or sales with forward purchase commitments. The Board decided to pursue an approach that would specify the types of repurchase agreements that would be accounted for as secured borrowings rather than sales. The Board decided to require that arrangements with the six characteristics described above would be accounted for as secured borrowings. As a result, the existing criteria in paragraph 860-10-40-24 for assessing whether the transferor surrenders effective control over transferred financial assets would be eliminated.

In a future meeting, the Board will discuss examples of repurchase agreements that would be accounted for as secured borrowings under the tentative decision and the accounting for similar arrangements, such as dollar roll repurchase agreements.

The Board also instructed the staff to research a potential project to broadly assess the overall derecognition model in FASB Accounting Standards Codification® Topic 860, Transfers and Servicing. On the basis of this research, the Board will consider at a later date whether to add a new project to its agenda to broadly assess the overall derecognition model.