FASB issues exposure drafts to improve accounting guidance, support convergence of global accounting standards.

The Financial Accounting Standards Board has issued four exposure drafts that would improve U.S. generally accepted accounting principles and converge U.S. accounting guidance to existing international accounting standards. You can obtain the documents from the FASB's Web site at www.fasb.org. Comments are due Apr. 13.

The exposure drafts reflect the progress that the FASB and International Accounting Standards Board have made on a first phase of a joint short-term convergence project that was initiated in 2002. This project involves both the FASB and IASB comparing existing standards and conforming the two sets of standards to the higher-quality solution.

The short-term convergence project is part of a comprehensive project to converge their respective accounting standards into a common set of high-quality accounting standards. In addition to this short-term project, the boards are jointly working on several projects on major accounting topics and are developing a coordinated agenda for continuing the convergence effort.

The exposure drafts propose the following accounting requirements:

* Voluntary changes in accounting policies would be required to be applied by retrospective application rather than by cumulative effect adjustment, as currently required.

* Three changes to the calculation of earnings per share.

* Asset exchanges that would require a gain or loss to be recognized on the exchange of similar productive assets based on the fair value of the exchange unless the exchange lacks commercial substance.

* Unusual ("abnormal") amounts of idle capacity and spoilage costs would be excluded from the cost of inventory and expensed as incurred.

FASB Issues Accounting Standard to Improve Disclosures about Pension and Other Postretirement Benefit Plans; Publishes Revised Interpretation to Clarify and Expand on Accounting Guidance for Variable Interest Entities

The Financial Accounting Standards Board has issued FASB Statement No. 132 (revised 2003), Employers' Disclosures about Pensions and Other Postretirement Benefits, that improves financial statement disclosures for defined benefit plans. The change replaces existing FASB disclosure requirements for pensions.

In an effort to provide the public with better and more complete information, the standard requires that companies provide more details about their plan assets, benefit obligations, cash flows, benefit costs and other relevant information. For the first time, companies are required to provide financial statement users with a breakdown of plan assets by category, such as equity, debt and real estate. A description of investment policies and strategies and target allocation percentages, or target ranges, for these asset categories also are required in financial statements.

In addition to expanded annual disclosures, the FASB is improving the information available to investors in interim financial statements. Companies are required to report the various elements of pension and other postretirement benefit costs on a quarterly basis. The guidance is effective for fiscal years ending after Dec. 15, 2003, and for quarters beginning after Dec. 15, 2003.

In another action, the FASB published a revision to Interpretation 46 ("46R" revised Dec. 2003) to clarify some of the provisions of FASB Interpretation No. 46, Consolidation of Variable Interest Entities, and to exempt certain entities from its requirements. The additional guidance is being issued in response to input received from constituents regarding certain issues arising in implementing Interpretation 46.

Under the new guidance, special effective date provisions apply to enterprises that have fully or partially applied Interpretation 46 prior to issuance of this revised Interpretation. Otherwise, application of Interpretation 46R (or Interpretation 46) is required in financial statements of public entities that have interests in structures that are commonly referred to as special-purpose entities for periods ending after Dec. 15, 2003. Application by public entities, other than small business issuers, for all other types of variable interest entities is required in financial statements for periods ending after Mar. 15, 2004. Application by small business issuers to variable interest entities other than special-purpose entities and by non-public entities to all types of variable interest entities is required at various dates in 2004 and 2005.

Both Statement 132 and Interpretation No. 46R are available on the FASB's Web site: www.fasb.org