Action Alert No. 08-18
May 1, 2008


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

Wednesday, May 7, 2008, 9:00 a.m.

  1. Conceptual framework: elements and recognition (estimated 1-hour discussion). The Board will discuss (a) how to distinguish between a liability and a business risk and (b) the principle of a stand-ready obligation and whether it can be applied to noncontractual situations.

  2. Determining whether instruments granted in share-based payment transactions are participating securities (estimated 1-hour discussion). The Board will redeliberate some of the decisions reached at the March 5, 2008 Board meeting on proposed FSP EITF 03-6-a, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities, based on issues that arose during drafting. The Board will discuss consideration of share-based payment awards not expected to vest, the effective date, and transition.

  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, May 7, 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.

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

Tuesday, May 6, 2008, 8:30 a.m. – 12:45 p.m.

The Board will meet with representatives of several insurance industry representational organizations, representatives from the user community specializing in the insurance industry, and others to discuss matters of mutual interest such as the FASB Invitation to Comment, An FASB Agenda Proposal: Accounting for Insurance Contracts by Insurers and Policyholders, Including the IASB Discussion Paper, Preliminary Views on Insurance Contracts.


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 21, 2008 FASB/IASB Joint Board Meeting

Memorandum of Understanding. In February 2006, the IASB and the FASB issued a Memorandum of Understanding (MoU) that described a joint work plan to expedite global convergence in accounting standards and established a series of milestones to be reached by 2008.

Most of those milestones have now been reached or are due to be reached during 2008. As a result, there is little remaining guidance on the prioritization of projects on the FASB and IASB’s active agenda in the medium to long term.

A number of jurisdictions have announced their intention to adopt or converge with IFRSs in the next five years. The chairmen of the IASB and the FASB agreed that the timeline contained within the existing MoU should be updated. Doing so will help to direct the work plan of the two Boards through to at least 2011. The two chairmen asked a small team made up of representatives from the IASB and the FASB to produce a paper on the subject for discussion at the joint board meeting.

The two Boards discussed that paper at their joint meeting and accepted the broad principles recommended in it. The Boards directed the staff to develop details for consideration in the technical plan update session at the IASB’s Board meeting in June. It is the intention that an updated work plan will be published after that meeting.

Revenue recognition. In July 2007, as part of the “Proactive Accounting Activities in Europe” initiative, the European Financial Reporting Advisory Group (EFRAG), the Deutsche Rechnungslegungs Standards Committee (DRSC) and the Conseil National de la Comptabilité published a discussion paper, Revenue Recognition—A European Contribution.*

The paper’s objective was to stimulate debate on revenue recognition in Europe and to develop European views to be considered by the IASB and the FASB in their joint project on revenue recognition. Representatives of the EFRAG and DRSC presented an overview of the discussion paper to the joint board meeting.

No decisions were made. The overview can be found in the observer notes for the session.
*The paper is available at

Conceptual framework: objectives and qualitative characteristics and reporting entity. The Boards continued to discuss the implications of adopting the entity perspective. This issue arose during the drafting of due process documents for the objective of financial reporting phase (Phase A) and the reporting entity phase (Phase D) of the framework project. The Boards affirmed their decision to adopt the entity perspective, in which the entity’s perspective is used in providing financial information about the entity’s business to its capital providers. This is in contrast to the proprietary perspective, in which the proprietor’s perspective is used in providing information about the proprietor’s business to the proprietor.

The Boards noted that they have not completed their initial deliberations in other phases of the framework project, such as defining the elements of financial statements (in Phase B of the project). Therefore, fuller implications of the decision to adopt the entity perspective on other phases will be analyzed in those phases, in due course, and communicated to constituents at that time. These implications need not be addressed before finalizing and publishing the Exposure Draft for Phase A for public comment. An explanation of the decisions reached and the implications not yet deliberated will be included in the bases for conclusions in both the Exposure Draft for Phase A and the Discussion Paper for Phase D.

In addition, the Boards discussed a sweep issue arising from comments on a draft Discussion Paper on the reporting entity phase relating to parent-only financial statements. The Boards tentatively agreed that, in concept:

  1. A parent entity should always present consolidated financial statements.

  2. The presentation of parent-only financial statements should not be precluded at the conceptual level, provided that they are included in the same financial report as the consolidated financial statements.

The Boards also noted that some presentation issues, for example, how to present information about particular subsidiaries, such as discontinued operations, will be dealt with at the standards level.

April 22, 2008 FASB/IASB Joint Board Meeting

Meeting of IASB, FASB, and CRUF. The Corporate Reporting Users’ Forum (CRUF) made a presentation at the joint board meeting. Observations were made on the Boards’ joint agenda, with suggestions for priorities and topics that the Boards should address. No decisions were made.

FASB and IASB—standard setters’ responses to credit crisis. The Boards discussed the steps they were taking in response to the credit crisis. When there are significant business failures, or a loss of confidence in markets, it is appropriate to examine whether improvements can be made to the system in which those businesses operate. Just as securities regulators, banking supervisors, and others have been assessing their roles in the crisis, it is appropriate that the Boards review the requirements of IFRS and U.S. GAAP.

The FASB is moving to eliminate the concept of a qualifying special-purpose entity and amend FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, to place more emphasis on qualitative, and therefore less reliance on quantitative, factors in assessing control. Part of that project, which the FASB expects to complete before the end of this year, is a review of disclosure requirements related to securitizations and off-balance-sheet activities.

The IASB is giving urgency to several areas where it thinks IFRS financial reporting could be improved—fair value measurement; financial instruments; consolidations and derecognition; disclosures about off-balance-sheet items; and disclosures about fair value measurements. The IASB had already undertaken a significant amount of work on the fair value measurement and consolidations and derecognition projects prior to the advent of the current crisis. The exposure draft being developed by the consolidations project staff will include any enhancements to IFRS 7, in relation to the disclosure of information about off-balance-sheet risks and fair value measurement, that the IASB thinks would be helpful.

The Boards agreed that they should work together to align their disclosure requirements. The Boards also agreed to assess whether the IASB’s consolidations project could become a joint project.


Final FSP FAS 142-3, Determination of the Useful Life of Intangible Assets, was issued on April 25, 2008 and is available on the FASB website.


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 14, 2008—FASB Board Meeting
Wednesday, May 14, 2008—FASB Education Session
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 Meeting
Wednesday, June 4, 2008—FASB Education Session
Tuesday, June 10, 2008—Investors Technical Advisory Committee Meeting
Wednesday, June 11, 2008—FASB Board Meeting
Wednesday, June 11, 2008—FASB Education Session
Thursday, June 12, 2008—Emerging Issues Task Force Meeting
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 Meeting
Wednesday, June 18, 2008—FASB Education Session
Thursday, June 19, 2008—Liaison Meeting with Financial Executives International, Stamford, CT
Tuesday, June 24, 2008—Financial Accounting Standards Advisory Council Meeting
Wednesday, June 25, 2008—FASB Board Meeting
Wednesday, June 25, 2008—FASB Education Session
Friday, June 27, 2008—Small Business Advisory Committee Meeting