*Decisions Reached at the Last Meeting (December 17, 2008)
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 their 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 of the project in the first quarter of 2009.
*Summary of Decisions Reached to Date (As of December 17, 2008)
Phase One
Scope
The Board agreed to retain the current scope of Interpretation 48 so it is still applicable to all entities, public and private, including pass-through entities and not-for-profit organizations.
Disclosures
Nonpublic enterprises that elect the deferral are required to provide an explicit disclosure of that election and also disclose their accounting policy for evaluating uncertain tax positions in each set of financial statements to which the deferral applies.
Effective Date
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).
Phase Two
Guidance for Pass-Through Entities and Not-for-Profit Organizations
The Board agreed to develop application guidance on Interpretation 48 for pass-through entities and not-for-profit organizations.
Disclosures
The Board agreed to exempt private entities from the disclosure requirements in paragraphs 21(a) and 21(b) of Interpretation 48. The Board agreed that private entities should not be exempt from the other disclosure requirements of Interpretation 48.
*Board/Other Public Meeting Dates
The Board meeting minutes 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 become final only after a formal written ballot to issue a final Statement, Interpretation, FSP, or Statement 133 Implementation Issue.
Background Information
The Board added the project on Interpretation 48 to its agenda on September 24, 2008, in response to an agenda request received from the Private Entity Financial Reporting Committee (PCFRC). The PCFRC requested an exemption from the requirements of Interpretation 48 for private entities in their unsolicited comment letter dated May 30, 2008. In lieu of such an exemption, they requested a deferral until the joint income tax convergence project is completed. The Board has since received additional comment letters supporting the agenda request from the PCFRC.
In response to these comment letters and informal discussions with other constituents, two Board members and several FASB staff members met on August 28, 2008, with a panel of users of private entity financial statements to discuss whether they believed that the recognition, measurement, and disclosure requirements of Interpretation 48 were useful and cost effective. Subsequently, on September 15, 2008, the AICPA Technical Issues Committee (TIC) met with three Board members and several FASB staff members to discuss concerns about Interpretation 48 for private entities and their CPA practitioners. The discussion with TIC focused on requests for a scope exemption or deferral and on whether guidance for pass-through entities was necessary to apply the Interpretation.
Due to differences in financial statement user needs and cost-benefit considerations for private entities, the Board has decided to undertake this project to determine whether it is necessary to provide any additional amendments to Interpretation 48 for private entities.
