Financial Reporting Alert 07-6: No Deferral for Stmts. 157 and 159; Deferral for SOP 07-1; Required Documentation for Stmt. 159
October 17, 2007
The Financial Accounting Standards Board (the “Board”) decided today not to do a wholesale deferral of the effective dates of FASB Statement No. 157, Fair Value Measurements and FASB Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. The Statements are effective for fiscal years beginning after November 15, 2007. The Board had received requests for deferral from a number of constituents as a result of the increasing number of implementation issues identified in practice.
The Board instructed the FASB staff to evaluate other deferral alternatives, which could include deferring certain assets and liabilities or certain entities. These alternatives will be discussed at a future Board meeting.
The Board also discussed plans to address implementation issues. Specifically mentioned was whether plan sponsors should be required to provide Statement 157 disclosures for their pension and other postretirement employee benefit plan assets. While the Board did not formally vote on the issue, the Board noted that it does not believe such disclosures should be required by Statement 157 and plans to address this issue (with other implementation issues) at a future Board meeting.
Note that the Board elected not to defer Statement 159. All Statement 159 fair value option elections for eligible instruments existing at the adoption date for fiscal years beginning after November 15, 2007, are required to be documented no later than the adoption date (for example, a calendar-year company that did not early adopt Statement 159 must have its fair value option elections documented as of January 1, 2008). The 120-day retroactive election provision in paragraph 30(a) of Statement 159 only applies to reporting entities that early adopt Statement 159.
The Board did vote to indefinitely defer the effective date of AICPA Statement of Position 07-1, Clarification of the Scope of the Audit and Accounting Guide Investment Companies and Accounting by Parent Companies and Equity Method Investors for Investments in Investment Companies, and add to the Board’s technical agenda a project to consider amending certain provisions of that SOP. The Board will address the scope of that project at a future meeting. Early adoption will not be permitted for reporting entities that have not already adopted the SOP.