November 29, 2018
The Investor Advisory Committee (IAC) met on November 29, 2018. At the meeting, the FASB staff delivered updates and IAC members provided input on the following FASB topics:
- Income Tax Disclosures: IAC members discussed the Board’s recent tentative decisions on the ongoing project to improve the effectiveness of disclosures on income taxes. Consistent with the prior IAC meeting, members reiterated the recommendation for additional transparency of information on a country-by-country basis, such as pretax income, income tax expense, and income taxes paid.
- Segment Reporting: IAC members discussed the Board’s current project on segment reporting focusing on potential improvements to the aggregation criteria in determining a company's reportable segments. Members expressed concerns about potential unintended consequences of changing the aggregation criteria because of the differences in how companies identify their operating segments. Although IAC members support the use of the management approach for identifying operating segments, they expressed concerns about the flexibility it provides.
- Distinguishing Liabilities from Equity: IAC members discussed the Board’s current project on distinguishing liabilities from equity, specifically focusing on the accounting for convertible instruments and related disclosures and earnings-per-share (EPS) improvements. Members expressed differing views on whether convertible instruments with embedded conversion features should be accounted for as a single unit of account.
- Anti-Dilutive EPS Hedge Transactions: One IAC member asked the Board to consider a project on the interaction between convertible debt and related anti-dilutive hedge transactions in the calculation of EPS. The member stated that several companies that engage in those arrangements present a non-GAAP EPS metric that considers the convertible debt and the related hedge transaction together. Another IAC member indicated that, as a part of this potential project, the Board should more broadly consider the anti-dilutive effect of other financial instruments on the EPS calculation, including stock compensation arrangements and related share repurchase agreements.
- SEC Disclosure Update and Simplification: IAC members provided feedback on the utility of certain disclosures referred to the FASB by the U.S. Securities and Exchange Commission (SEC) as part of the SEC’s disclosure update and simplification initiative.
The next IAC meeting will be held on May 14, 2019. For more information on the Investor Advisory Committee, visit the FASB website.