Project Updates

Objective(s)

The objective of this project is to establish general standards of accounting for and reporting of events that occur subsequent to the balance sheet date that would augment existing requirements that are currently contained in the auditing literature. A further objective of the project is to consider whether certain minor differences between U.S. GAAP and the corresponding international financial reporting standard, IAS 10, Events after the Balance Sheet Date, could be eliminated or minimized.

Decisions Reached at the Last Meeting

The Board voted to continue with its previous plans to develop standards that reflect the principles underpinning current subsequent events guidance in existing accounting standards and in the auditing requirements contained in AICPA Codification of Statements on Auditing Standards, AU Section 560, Subsequent Events, while considering whether certain minor differences between U.S. GAAP and the corresponding international financial reporting standard, IAS 10, Events after the Balance Sheet Date, could be eliminated or minimized. The Board further decided that the project would not address inconsistencies or differences between U.S. GAAP and international financial reporting standards in the following areas:

1. Refinancing of short-term obligations

2. Curing breaches of borrowing covenants

The Board decided that subsequent events should be considered for adjustment to or disclosure in the financial statements through the date that the financial statements are issued or first available to be issued, and that the date through which subsequent events have been considered should be disclosed in the notes to the financial statements.

The Board decided that the standard issued as a result of this project will include a general scope exception for any existing authoritative accounting literature that conflicts with it. In other words, the Board will not seek to amend existing standards that are considered to be inconsistent with the principles underpinning AU 560.

*Immediate Plans

On September 19, 2007, the Board removed this project from its agenda.

Summary of Tentative Decisions

Related to its effort to develop an authoritative codification of U.S. GAAP, the Board decided to add a project to its agenda to establish general standards of accounting for and reporting of events that occur subsequent to the balance sheet date.

The Board decided not to undertake a fundamental reexamination of this area. Rather, it plans to develop standards that reflect the principles underpinning current subsequent events guidance in existing accounting standards and in the auditing requirements contained in AICPA Codification of Statements on Auditing Standards, AU Section 560, Subsequent Events.

The Board also decided that an objective of the project would be to consider whether certain minor differences between U.S. GAAP and the corresponding international financial reporting standard, IAS 10, could be eliminated or minimized. Those efforts will focus on guidance related to:

1. The date through which subsequent events are considered for adjustment to or disclosure in the financial statements

2. The reissuance of financial statements

3. The examples used to illustrate the accounting requirements.

The Board further decided that the project would not address inconsistencies or differences between U.S. GAAP and international financial reporting standards in the following areas that the Boards plan to address in their joint project on reporting financial performance, including:

*Board Meetings/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 or Interpretation.

The following are links to the minutes for each meeting.

History and Background

The Board added this project to its agenda on August 17, 2005.

The current accounting requirements for subsequent events are contained in AU Section 560. AU Section 560 prescribes the accounting requirements for two types of subsequent events: the first type consists of those events that provide additional evidence about conditions that existed at the balance sheet date and the second type consists of those events that provide evidence with respect to conditions that did not exist at the balance sheet date but arose subsequent to that date.

International financial reporting standards (IFRS) have a separate accounting standard for subsequent events, IAS 10. While the accounting requirements in AU Section 560 and IAS 10 are converged in principle, there are some minor differences between the two standards.

Constituents have expressed concern that the accounting requirements are currently part of the auditing literature and have suggested that they should be moved into the FASB literature. Moving the accounting requirements out of the auditing literature and into the accounting literature will assist the Board's codification and retrieval project and also provide an opportunity to consider international convergence issues.

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