FASB Discusses Pension/OPEB Measurement Date, More

July 26, 2006

FEI Summary

The following summarizes selected items discussed at the July 26, 2006 Financial Accounting Standards Board (FASB) board meeting. Further information on all topics discussed is available in the agenda for the meeting and related board handout.

FASB Reaffirms Requirement to Align Measurement Date, Balance Sheet Date for Pension OPEB, but delays effective date of alignment requirement

FASB voted to retain the requirement that companies align their measurement date with their balance sheet date, as set forth in its March 31, 2006 Exposure Draft (ED), Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans. However, to allow more time for companies to conform to these dates, FASB voted to delay the measurement date alignment requirement until fiscal years ending on or after Dec. 15, 2008. FASB also reaffirmed that the remainder of the standard (other than the measurement date requirement) will become effective for public companies for fiscal years ending on or after Dec. 15, 2006. However, nonpublic entities will be provided a delayed effective date of fiscal years ending on or after June 15, 2007. Further details are on pages 3-6 of today’s FASB board handout.

FASB to Issue FSP with Technical Corrections for FAS 123(R) – Share Based Payment

FASB agreed that its staff could issue a proposed FSP with technical corrections on FAS 123(R), Share-Based Payment. The three issues to be covered by the proposed FSP are described in the last two pages of today’s FASB board handout. There will be a 30- day comment period on the proposed FSP, which will propose retrospective transition for entities that had adopted FAS123(R) in a manner inconsistent with the guidance in the new FSP. FASB staff indicated they did not believe many entities will need to retroactively adjust.

FASB Board Asks Staff for Further Analysis on Proposed FSP on Measurement of Certain Nonfinancial Assets/Liabilities

The FASB board also debated issues surrounding development of a proposed FSP on measurement of certain nonfinancial assets and nonfinancial liabilities. The proposed FSP, as described on pages 7-9 of today’s FASB board handout, was suggested to be developed at a recent board meeting due to issues raised by constituents about differences between how fair value has been interpreted under the business combinations standards (FAS 141, 142, 144), certain other standards and the new fair value measurement model in FASB’s soon-to-be-issued Fair Value Measurement standard. No consensus was reached, and FASB Chairman Robert Herz asked the staff to come back with further analysis.

Prepared July 26, 2006 by Edith Orenstein (eorenstein@FinancialExecutives.org), Director, Technical Policy Analysis, Financial Executives International (FEI) based on listening to the webcast of the FASB meeting. This summary does not represent FEI opinion, unless specifically noted above.