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 a final standard.

December 17, 2008 Board Meeting

Statement 140 implementation: transfers of financial assets. The Board decided to complete its short-term project to amend FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, rather than pursue a long-term joint project with the IASB to develop a common derecognition standard. Once completed, the Board expects to join with the IASB on the long term project. The Board is reluctant to reconsider linked presentation in the short term project; however, the Board asked the staff to bring back the issue of linked presentation for redeliberation if the Board receives additional information about a workable model.

The Board decided that the staff should evaluate the differences between the control assessments in the proposed amendments to Statement 140 and FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, as the redeliberations of both projects continue. The Board also asked the staff to provide an example of a guaranteed mortgage securitization to assess the operationality of the proposed amendments to both Statement 140 and Interpretation 46(R), including consideration of the classification of transferred mortgage assets as loans or securities.

The Board affirmed the following provisions of the Exposure Draft of the proposed amendment to Statement 140:

  1. Removal of the qualifying special purpose entity concept
  2. The requirement that a transferor consider all arrangements or agreements made contemporaneously with, or in contemplation of, the transfer, even if they were not entered into at the time of the transfer
  3. Implementation guidance on isolation
  4. Removal of special provisions for guaranteed mortgage securitizations.

The Board decided to consider at a future meeting the proposed changes related to:

  1. Participating interests
  2. Partial sales
  3. Amendments to paragraph 9(c)(3) of the proposed amendment to Statement 140 related to effective control
  4. Whether a transferor regains control of transferred financial assets, as discussed in EITF Issue No. 02-9, “Accounting for Changes That Result in a Transferor Regaining Control of Financial Assets Sold,” and paragraph 55 of the proposed amendment to Statement 140
  5. Measurement of participating interests and beneficial interests held by a transferor
  6. Whether guidance about implicit arrangements, which was included in the definition of continuing involvement of FSP FAS 140-4 and FIN 46(R)-8, Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities, should be provided in the proposed amendment to Statement 140
  7. Disclosures.

Reconsideration of Interpretation 46(R). The Board discussed significant issues raised in comment letters on the FASB Exposure Draft, Amendments to FASB Interpretation No. 46(R). (A summary of those significant issues will be available in the comment letter analysis within the project summary on the FASB website.) The Board decided that the following issues will be redeliberated at future Board meetings:

  1. Reconsideration of an entity’s status as a variable interest entity.
  2. Determination of a significant variable interest in paragraph 6 of FASB Interpretation No. 46(revised December 2003), Consolidation of Variable Interest Entities.
  3. Guidance and clarification of the Board’s premise of “power” in determining a variable interest entity’s primary beneficiary (specifically, kick-out rights, shared power, and fiduciary responsibility).
  4. Guidance for determining an enterprise’s right to receive benefits or its obligation to absorb losses of a variable interest entity when determining the primary beneficiary.
  5. Whether the quantitative analysis (Step 2) for determining the primary beneficiary is necessary.
  6. Related party guidance (paragraphs 16 and 17 of Interpretation 46(R)).
  7. Whether deconsolidation guidance should be provided.
  8. Measurement of consolidated assets and liabilities at transition.
  9. Separate classification of elements (disallowed, permitted, required).
  10. Clarification of the purpose and content of the examples in Appendix A.
  11. Effective date.
  12. Disclosures.

The Board decided not to redeliberate the following issues:

  1. Reconsideration of primary beneficiary status.
  2. Implicit variable interests.
  3. Converged standard with the IASB.
  4. One consolidation model for voting interest entities and variable interest entities.
  5. Inconsistency between the definition of control under Statement 140 and the proposed Statement.
  6. Recognition of assets and liabilities that do not meet the definition of assets and liabilities in FASB Concepts Statement No. 6, Elements of Financial Statements.
  7. Elimination of the troubled debt restructuring exemption from reconsideration.
  8. Scope.
  9. Linked Presentation. (The Board is inclined not to reconsider linked presentation; however, the Board asked the staff to bring back that issue for redeliberation if the Board receives additional information about a workable model.)

Deferral of Interpretation 48 for certain nonpublic entities. The Board discussed the comments received on proposed FSP FIN 48-c, Effective Date of FASB Interpretation No. 48 for Certain Nonpublic Enterprises .

The Board affirmed its previous decision that nonpublic enterprises may elect to defer their application of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, for an additional year (until annual financial statements for fiscal years beginning after December 15, 2008). Also, the Board affirmed its previous decision to not permanently exempt nonpublic enterprises from the scope of Interpretation 48.

The Board decided that nonpublic enterprises that elect the deferral should include an explicit disclosure of that election and also disclose its accounting policy for evaluating uncertain tax positions in each set of financial statements to which the deferral applies.

The Board directed the staff to proceed to a draft of a final FSP for vote by written ballot.

The Board directed the staff to proceed with the second phase of the project that will (1) develop guidance on the application of Interpretation 48 to pass-through entities and not-for-profit organizations and (2) amend the disclosure requirements for nonpublic enterprises. The Board set a goal of finalizing the second phase in the first quarter of 2009.

Agenda decision announcement. The FASB chairman announced that a project was added to the Board’s agenda to approve the FASB Accounting Standards Codification as the single source of authoritative U.S. GAAP, effective July 1, 2009, and make corresponding amendments to FASB Statement No. 162, The Hierarchy of Generally Accepted Accounting Principles.