Action Alert No. 07-45
November 8, 2007


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

Wednesday, November 14, 2007, 9:00 a.m.

  1. Financial statement presentation (estimated 90-minute discussion). The Board will discuss the alternatives to be included in the initial discussion document for the statement of comprehensive income, the statement of cash flows, and the reconciliation of the statement of cash flows to the statement of comprehensive income. In addition, the Board will discuss the subtotals and totals that would be presented on each of the financial statements.

  2. Agenda requests: Effective date of Statement 157 and certain Statement 157 implementation issues (estimated 60-minute discussion). The Board will discuss alternatives for a deferral of the effective date of FASB Statement No. 157, Fair Value Measurements. The Board also will discuss whether to add a separate project to its agenda to address certain issues on the application of Statement 157.

  3. Statement 140 implementation—repurchase financing agreements (estimated 60-minute discussion). The Board will discuss issues raised by respondents to proposed FSP FAS 140-d, Accounting for Transfers of Financial Assets and Repurchase Financing Transactions. The Board will focus on the scope of the FSP, the approach that should be used to determine if the initial transfer and the repurchase financing agreement transactions should be linked, and the criteria relating to implied commitments, recourse, and marketability. The Board also will discuss the effective date and transition provisions for the FSP and whether to issue the FSP as final.

  4. 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, November 14, 2007, 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 sessions.

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

Tuesday, November 13, 2007, 2:30 p.m. - 4:00 p.m.

The Investors Technical Advisory Committee will meet with the Board to discuss matters of mutual interest.


Friday, November 16, 2007, 9:00 a.m. - 12:00 p.m.

The Board will meet with representatives of the Corporate Disclosure Policy Committee of the CFA Institute to discuss matters of mutual interest.


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.

October 31, 2007 Board Meeting

Financial statement presentation. The Board decided that an entity would be required to present a classified statement of financial position except when presenting assets and liabilities in order of increasing or decreasing liquidity provides information that is reliable and is more relevant.

The Board discussed its previous decision to adopt the capital management disclosures currently required by IAS 1, Presentation of Financial Statements, and the recent IASB decision that operating items would not be included in those disclosures. The Board noted that those disclosures are particularly important for entities that have externally imposed capital restrictions. However, the purpose of the Preliminary Views should be to assess the usefulness of capital management disclosures that would apply to entities more broadly. Thus, the Board decided that the Preliminary Views should solicit information about what type of information about capital and management of that capital should be disclosed by all entities.

The Board confirmed its March 2007 decision that cash receipts and payments should not be offset (presented net) in the statement of cash flows unless there is no incremental value in the additional information provided by a gross presentation. The Board agreed that the Preliminary Views should describe that principle, describe the characteristics of some cash receipts and payments that would meet it (such as when turnover is quick, the amounts are large, and the maturities are short), and ask for feedback on the appropriateness of the principle and whether additional application guidance would be necessary.

The Board decided that for purposes of the Preliminary Views, the classification of common dividends payable and the related cash flows should be based on the current classification of dividends payable as a liability. Thus, common dividend payments would not be classified in the equity section of the statement of cash flows. The Board observed that the classification of dividends payable and certain types of equity instruments may change as a result of its project on liabilities and equity.

The Board decided that foreign currency translation adjustments related to consolidated subsidiaries should be presented in a separate foreign currency translation adjustment section in the statement of comprehensive income and that those adjustments related to equity method investments should be presented in the same category as the investment.

The Board discussed whether the effects of basket transactions (single transactions that involve multiple assets or a combination of assets and liabilities that would be classified in more than one category under the working format) should be allocated to multiple categories or whether those effects should be classified in one category. The Board did not reach a decision and directed the staff to develop some reasonable allocation methods for discussion at a future meeting.

Valuation of nonfinancial assets and emission allowances that are acquired for resale. The Board discussed four alternative models to incorporate into a potential FSP to amend ARB No. 43, Restatement and Revision of Accounting Research Bulletins. The Board agreed that the proposed FSP would require mark-to-market accounting if the item is bought and sold with the objective of making a profit (that is, meets that staff’s definition of trading) and the item has a readily determinable fair value. The Board also agreed that the proposed FSP would include the staff’s definition of trading and readily determinable fair value. The Board directed the staff to conduct further research to determine the appropriate transition method for the proposed FSP. The Board agreed that the proposed FSP would be effective for fiscal years beginning after November 15, 2008, and that early adoption would not be permitted.

Agenda decision: not-for-profit endowment and UPMIFA. The Board discussed the implications of the Uniform Prudent Management of Institutional Funds Act of 2006 (UPMIFA) on the net asset classification of donor-restricted endowment funds by not-for-profit organizations, including the (a) short-term spending flexibility it affords, (b) diverse views of constituents about its implications, and (c) need for guidance on the application of the relevant provisions and guidance provided by:

  1. FASB Statement No. 117, Financial Statements of Not-for-Profit Organizations

  2. FASB Statement No. 124, Accounting for Certain Investments Held by Not-for-Profit Organizations

  3. EITF Topic No. D-49, “Classifying Net Appreciation on Investments of a Donor-Restricted Endowment Fund.”

The Board added a short-term project to its agenda and decided to issue an FSP to provide further guidance. The Board agreed that guidance should:

  1. Affirm that, consistent with the principle for classifying endowment appreciation in paragraph 22 of Statement 117, in the absence of explicit donor stipulations, a not-for-profit organization should continue to classify a portion of a donor-restricted endowment fund as permanently restricted net assets, which continues to be based on the amount of the donor restriction that, in the long run, remains in force permanently. As noted in Statement 117, that determination ultimately rests with the organization’s governing board and its interpretation of the entity’s accountability to its donor for a restriction of permanent duration based on the donor’s stipulations and relevant state law (including the state’s adopted version of UPMIFA).

  2. Affirm that an organization should disclose its interpretation of relevant state law in the notes to the financial statements.

  3. Include additional disclosures that may be necessary to provide sufficient transparency to users in the new UPMIFA environment. The Board directed the staff to develop those disclosures for further consideration by the Board.

  4. Affirm the continued applicability of the guidance in paragraphs 12 and 13 of Statement 124 to so-called under water situations and observe that the short-term spending flexibility afforded under UPMIFA does not change an organization’s long-term accountability for a fund of perpetual duration.

  5. Affirm the continued applicability of the guidance in Topic D-49. The Board observed that (a) contractual or other legally imposed restrictions on particular assets do not necessarily constitute donor-imposed restrictions for accounting purposes and (b) a temporary restriction should not be implied from the “donor restricted assets” language in Section 4(a) of UPMIFA.

  6. Clarify that, similar to the guidance in Topic D-49, a temporary restriction should not be implied from the rebuttable presumption of imprudence provision under some versions of UPMIFA.


The following is a list of open meetings tentatively scheduled through December. 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, November 21, 2007—FASB Board Meeting
Wednesday, November 21, 2007—FASB Education Session
Wednesday, November 28, 2007—FASB Board Meeting
Thursday, November 29, 2007—Emerging Issues Task Force Meeting
Wednesday, December 5, 2007—FASB Board Meeting
Wednesday, December 5, 2007—FASB Education Session
Thursday, December 6, 2007—Financial Accounting Standards Advisory Council Meeting
Friday, December 7, 2007—Small Business Advisory Committee Meeting
Wednesday, December 12, 2007—FASB Board Meeting
Wednesday, December 12, 2007—FASB Education Session
Wednesday, December 19, 2007—FASB Board Meeting
Wednesday, December 19, 2007—FASB Education Session