FASB Increases Relevance and Comparability of Financial Reporting of Income Taxes

Final Interpretation Reduces Widespread Diversity in Practice

Norwalk, CT, July 13, 2006—The FASB today issued an interpretation that increases the relevancy and comparability of financial reporting by clarifying the way companies account for uncertainty in income taxes. Currently, the accounting for uncertainty in income taxes, which is based upon validity of a tax position, is subject to significant and varied interpretations that have resulted in diverse and inconsistent accounting practices and measurements.

Accordingly, today’s interpretation of FASB Statement No. 109, Accounting for Income Taxes prescribes a consistent recognition threshold and measurement attribute, as well as clear criteria for subsequently recognizing, derecognizing and measuring such tax positions for financial statement purposes. The Interpretation also requires expanded disclosure with respect to the uncertainty in income taxes.

“Today’s interpretation reflects our concerns that widespread diversity in practice, including inconsistent measurement associated with uncertainty in accounting for income taxes, has resulted in less relevant, less comparable and less complete information for investors and other users of financial statements,” said Edward W. Trott, FASB Member. “Consequently, we are addressing these concerns by requiring all tax positions be evaluated using consistent criteria and measurement and further supplemented by enhanced disclosure.”

This Interpretation, which incorporates comments received from FASB constituents, as well as views expressed during a public roundtable, is effective for fiscal years beginning after December 15, 2006.

About the Financial Accounting Standards Board

Since 1973, the Financial Accounting Standards Board (FASB) has been the designated organization in the private sector in the US for establishing standards of financial accounting and reporting. Those standards govern the preparation of financial reports and are officially recognized as authoritative by the Securities and Exchange Commission and the American Institute of Certified Public Accountants. Such standards are essential to the efficient functioning of the economy because investors, creditors, auditors and others rely on credible, transparent and comparable financial information. For more information about the FASB, visit its website at