SUMMARY OF BOARD DECISIONS

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.

June 3, 2009 Board Meeting

Going concern. The Board continued redeliberating the October 2008 FASB Exposure Draft, Going Concern. The Board decided to broaden the scope of the project to address three additional areas:

  1. Enhancing the disclosures of short-term and long-term risks, specifically risks for which there is more-than-remote likelihood of occurrence

  2. Defining substantial doubt in terms of an entity’s ability to continue as a going concern

  3. Defining when it is appropriate for an entity to apply the liquidation basis of accounting.

The Board will discuss these issues at a future meeting.

The Board decided that the time frame for the disclosures of short-term and long-term risks as well as the assessment of an entity’s ability to continue as a going concern would be as follows:

Available information about the foreseeable future, which is generally, but not limited to, 12 months from the end of the reporting period. Certain events that are expected to occur or are reasonably foreseeable beyond 12 months and would materially affect the assessment are considered part of the foreseeable future. The time frame beyond 12 months is limited to a practical period of time thereafter in which significant events or conditions that may affect the evaluation can be identified.

FASB Accounting Standards CodificationTM and the hierarchy of generally accepted accounting principles. The Board redeliberated its March 27, 2009, Exposure Draft, The Hierarchy of Generally Accepted Accounting Principles, and made the following decisions:

  1. The Board affirmed its decision that nonpublic entities would prospectively apply the guidance in AICPA Technical Inquiry Service (TIS) Section 5100, “Revenue Recognition,” paragraphs 38–76 for revenue arrangements entered into or materially modified in those fiscal years beginning on or after December 15, 2009, and interim periods within those years.

  2. The Board decided not to include in the final GAAP hierarchy the notion that the FASB Concepts Statements would normally be more influential than other sources of nonauthoritative GAAP.

  3. The Board affirmed the proposed guidance that precluded an entity from using an “accounting treatment specified in accounting guidance for similar transactions or events in cases in which those accounting principles either prohibit the application of the accounting treatment to the particular transaction or event or indicate that the accounting treatment should not be applied by analogy.”

  4. The Board decided that the final Statement will be effective for financial statements issued for interim and annual periods ending after September 15, 2009. That means that many entities will begin to apply the Codification effective in interim periods beginning on or about July 1, 2009.

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

Statement 133 implementation issue: embedded credit derivatives scope exception. The Board approved clarifications to proposed Statement 133 Implementation Issue No. C22, “Exception Related to Embedded Credit Derivatives.” That proposed Implementation Issue addresses the scope exception in paragraph 14B of FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, which indicates that the concentration of credit risk that is only in the form of subordination of one financial instrument to another should be considered an embedded derivative feature that is not subject to the application of paragraphs 12 and 14A of Statement 133. The Board agreed that the scope exception in paragraph 14B should apply only to the credit derivative features that arise between tranche holders of beneficial interests and that are related to the credit loss allocation among the tranches attributable to the subordination of one tranche to another.

The Board also decided to provide additional guidance about the application of paragraphs 12, 13, and 14A of Statement 133 to the embedded derivative features in the examples in the proposed Implementation Issue C22.

The Board decided to reexpose the revised proposed Implementation Issue C22 for a 45-day comment period. The effective date of the revised proposed Implementation Issue C22 will be the first day of each reporting entity’s first fiscal quarter beginning after December 15, 2009.

The Board directed the staff to proceed to a draft of the revised proposed Implementation Issue C22 for vote by written ballot.