Serena Dávila, FEI’s Director of Technical Activities in our Washington, D.C. office, staff liaison to FEI’s Committee on Private Companies, shared with us info on FASB’s decisions reached earlier this week on private company application of FASB Interpretation No. 48, Uncertain Income Taxes (FIN 48).
As background, Dávila notes private co’s are currently under a deferral of FIN 48, set forth in FSP FIN 48-2, issued in February, which stated: “This FSP defers the effective date of Interpretation 48 for nonpublic enterprises included within this FSP’s scope to the annual financial statements for fiscal years beginning after December 15, 2007. When effective, Interpretation 48 should be applied as of the beginning of the enterprise’s fiscal year.”
With the end of the deferral period for private co’s looming, FASB discussed at its Oct. 1 board meeting whether certain types of nonpublic entities should receive a further deferral of FIN 48, and discussed disclosure relief from certain provisions of FIN 48 for all private companies.
FEI’s Committee on Private Companies (CPC), standards subcommittee, notes Dávila, filed a comment letter with FASB in August asking that private companies be exempted from FIN 48. The FEI CPC letter backed a similar request made on May 30 by the Private Companies Financial Reporting Committee (PCFRC), a joint committee of FASB and the AICPA.
At its meeting on October 1, FASB considered comment letters received. Although FASB did not grant a further deferral of FIN 48 for all private companies, the board agreed to propose a further deferral for all private pass-through entities based on the entity’s federal income tax status, and to propose disclosure relief from certain provisions of FIN 48 for all private companies. FASB will also release a third proposal to provide guidance on application of FIN 48 by private pass-through entities.
Further details on results of the FASB meeting (the FIN 48 item) can be found in FASB’s Summary of Decisions reached and in this FEI summary (FEI members).
In other FASB action this week, we reported previously on FASB’s decision to issue further guidance on fair value by authorizing release of Proposed FSP FAS 157-d, to include examples of fair valuing in inactive markets. The proposed FSP is expected to be released today, and statements made by FASB earlier this week indicated the comment period would end Oct. 9 so that FASB could hold a board meeting on Oct. 10 to discuss comments received and finalize the FSP in a timely matter to apply to third quarter reporting. In related news we also reported on the joint SEC-FASB guidance issued on Sept. 30 on fair value in inactive markets. If you’d like to receive our blog by email, sign up here.
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