The Financial Accounting Standards Board made noteworthy decisions regarding the effective dates of two significant accounting standards, agreeing to propose a delay of the effective date of one and, for certain entities, agreeing to consider a delay of the effective date of the other. Those standards are Statement of Position 07-1, Clarification of the Scope of the Audit and Accounting Guide, Investment Companies, and Accounting by Parent Companies and Equity Method Investors for Investments in Investment Companies (SOP 07-1), and FASB Statement No. 157, Fair Value Measurements (FAS 157).
Proposed delay of the effective date of SOP 07-1
Because of numerous SOP 07-1 implementation issues that have surfaced in practice since the SOP was issued earlier this year, the FASB has agreed to propose an indefinite delay of the effective dates of SOP 07-1 and, for entities that meet the definition of an investment company in SOP 07-1, of FSP FIN 46(R)-7, Application of FASB Interpretation No. 46(R) to Investment Companies.
The proposed delays, which will be exposed for comment for 30 days, will enable the FASB to add a project to its technical agenda to address the implementation issues that have arisen and possibly revise SOP 07-1. Until that occurs, affected entities should continue to follow existing guidance. For example, paragraph 1.06 of the Investment Company Audit Guide provides criteria for defining an investment company, and guidance regarding the retention of specialized industry accounting principles upon consolidation is provided by EITF Issue 85-12, "Retention of Specialized Accounting for Investments in Consolidation."
Delay of the effective date of FAS 157 for certain companies to be considered
The Board has not decided to delay the effective date of FAS 157. However, recognizing the challenges that companies are experiencing in preparing to implement FAS 157, the Board agreed to consider delaying its effective date for certain entities that may include non-public companies, smaller public companies (as yet undefined), and all entities with respect to non-financial instruments. To that end, the Board asked its staff to develop recommendations on whether a delay would be appropriate and, if so, who and what it should apply to. The staff's recommendations will be presented to the Board and discussed at a future meeting.
Since any delay is not assured, calendar year-end companies should continue to focus on implementing FAS 157 as of January 1, 2008. PricewaterhouseCoopers' "Hot Topics" Webcast, which discussed certain FAS 157-related issues and can be accessed via the link below, may be useful in that regard.
The following link provides a replay of the Webcast:
www.visualwebcaster.com/event.asp?id=38933.
Questions
For specific advice or assistance, please contact your PricewaterhouseCoopers engagement team or a Partner in our Alternative Investment Funds Practice.
