FASB Tells Task Force to Reconsider Split-Dollar Arrangements

The FASB said that, while it believes some issues from comments received were already considered initially by the task force, it believes the task force should reconsider its initial conclusions in its entirety.

Among specific recommendations offered to the EITF for consideration based on comments received was a delay in the effective date of the new accounting standards at a minimum to at least fiscal periods beginning after June 15, 2007. The FASB also suggested the task force consider providing guidance on both the income tax accounting and classification in the statement of cash flows for split-dollar arrangements, based on its conclusions after reconsidering the proposed accounting standards.

The FASB included in its supplement further analysis of the task force’s initial proposal based on concerns that an entity should not be required to record an obligation for a postretirement benefit when there will be no future outflow of cash after the initial premium payment.

The FASB also pointed out why it believed split-dollar arrangements did not qualify as a settlement under terms of FAS 106, which regulates accounting for post-retirement benefits that are part of a plan for retirees, but not a pension plan; or APB12, which provides guidance on accounting for deferred compensation contracts that do not constitute a plan. However, the FASB suggested the task force reconsider this view in its redeliberations. The FASB presented a draft abstract clarifying the EITF views on this issue as part of the supplement.

FASB documents can be viewed at  www.fasb.org .