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 an Accounting Standards Update.
April 25, 2012 FASB Board MeetingDisclosure framework. The Board discussed issues on (1) interim disclosures and (2) the costs and consequences of disclosure. The Board decided to include in the Invitation to Comment a discussion of both those issues.
The Invitation to Comment also will include an overview of the project, a framework for the Board for setting disclosure, a decision process an entity can use for providing disclosure, and guidance for organizing and formatting the notes. No further discussion on the Invitation to Comment is planned.
Consolidation: policy and procedures.
The staff presented a summary of the comment letters received on the Exposure Draft, Consolidation (Topic 810): Principal versus Agent Analysis. That feedback focused on a variety of different issues, including:
- The principle of and objective for consolidation and potential alignment with the voting interest model
- Substantive kick-out and participating rights
- Fee seniority
- The decision maker’s exposure to negative and positive returns
- Reassessment criteria
- Principal versus agent as a separate analysis
- Consolidation conclusions for certain entities, including money market funds
- Related party considerations
- The evaluation of partnerships and similar entities
- Effective date and transition
- Application to nonpublic entities
- Determination of the primary beneficiary
- Examples in the proposed implementation guidance.
Nonpublic entity fair value measurement disclosures. The Board discussed whether a narrative disclosure of the reasons for significant changes in the amount of assets and liabilities measured under Level 3 of the fair value hierarchy would be a cost-effective alternative to the existing requirement to disclose tabular reconciliations from the opening balances to the closing balances for (1) derivative assets and liabilities, (2) pension and postretirement plan assets, and (3) all other assets and liabilities measured under Level 3 of the fair value hierarchy on a recurring basis. The Board directed the staff to perform targeted outreach with preparers, CPA practitioners, and users of nonpublic entity financial statements to gather information about whether that alternative would be cost-effective, and to report its findings at a future Board meeting.
The Board decided that the scope of the project should exclude nonpublic entities for which substantially all assets are measured at fair value on a recurring basis.
The Board also decided that the scope of the project should exclude not-for-profit entities; however, the Board directed the staff to solicit input from stakeholders about that exclusion.
Definition of a nonpublic entity. The Board decided that an entity that is required to file or furnish financial statements with the SEC for purposes of issuing securities to be traded in a public market should not be included in the definition of a private company. The Board also decided that a privately held financial institution should be included in the definition of a private company.