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.

June 19, 2013 FASB Board Meeting

Disclosure Framework. The Board discussed forward-looking disclosure information, the decision questions in Chapter 2 of the FASB Invitation to Comment, Disclosure Framework, and staff-suggested revisions to the technical plan.

The Board made the following decisions:
  1. The Board agreed that the following items relating to the future would be appropriate for consideration by the Board in establishing disclosure requirements:
    1. Information about existing conditions or specified future changes that have implications for the future.
    2. Management’s plans.
    3. Expectations and assumptions about the future that are inputs to a measurement presented or disclosed in current period financial statements and that are intended to explain that measurement. The Board also agreed that examples of disclosures that would likely not be considered by the Board for disclosure would be:
      1. Expectations and assumptions about the future used as inputs to an impairment test that does not result in recognition of an impairment loss. (A disclosure about an entity being close to the threshold for impairing an asset would be a disclosure of a current condition not a disclosure of an expectation or assumption about the future.)
      2. Expectations and assumptions about the future that are inputs to a measurement if they are being used for some purpose other than explaining that measurement.
      3. Expectations and assumptions about the future that are implied by an observable market price but that are not actually used by the entity as as inputs to a measurement.
  2. The Board discussed some of the decision questions and indicated disclosures in Chapter 2. Those questions are being considered as the basis of a decision process for the Board to use in establishing disclosure requirements. Most of the questions and indicated disclosures discussed related to information about other past events and existing conditions that may affect future cash flows. Some of the respondents to the Invitation to Comment suggested that the indicated disclosures would encourage the Board to require disclosure of “forward-looking” information in the notes to financial statements that would be granted “safe harbor” if included in Management’s Discussion and Analysis. The Board decided that the questions address appropriate issues but that some of the indicated disclosures should be modified to focus more sharply on past events and existing conditions. The Board specifically identified the following changes and directed the staff to consider whether other indicated disclosures might need similar modifications:
    1. Replace the current language in “Information to Be Considered for Disclosure” from decision question G2(c) with the following:
      1. “Judgments and assumptions made by an entity when determining whether to consolidate an entity.”
      2. Modify the “Information to Be Considered for Disclosure” from decision questions O1(d) and O2(e) to say:” A current measure of the possible effect of the event or condition on future cash flows.”
    2. Remove “A judgment of the prospects for losing the customers or suppliers” as “Information to Be Considered for Disclosure” in decision question O3(b).
  3. In response to comments that some of the decision questions about other events and conditions may not be comprehensive and should be less specific, the Board decided to add an introductory statement to the questions that relate to the inputs, outputs, and external factors that affect an entity’s operations (questions O3 to O7). That introduction would acknowledge that although the questions are intended to be general enough to include all known factors, the Board should consider periodically whether there are others or whether new factors arise.
  4. The Board decided to separate the entity’s decision process and the Board’s decision process on the Board’s current technical plan to make clear that the two are separate issues and will be the subjects of separate Exposure Drafts. The Board also decided to consider disclosures in financial statements for interim periods at the same time as it considers disclosures in annual financial statements.