Project Update

Disclosures by Business Entities about Government Assistance

Last updated on October 15, 2014. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.

(Updated sections are indicated with an asterisk *)

The staff has prepared this summary of Board decisions for information purposes only. Those Board decisions are tentative and do not change current accounting. Official positions of the FASB are determined only after extensive due process and deliberations.

Project Objective
*Decisions Reached at Last Meeting
*Next Steps
*Board/Other Public Meeting Dates
Background Information
*Contact Information

Project Objective

The objective of this project is develop disclosure requirements about government assistance that improves the content, quality and comparability of financial information and financial statements and that is responsive to the emerging issues in the changing financial and economic environment in which reporting entities operate.

*Decisions Reached at Last Meeting

The Board discussed the following four scope-related issues:
  1. Principle to describe government assistance transactions that would be within the scope
  2. Explicit scope exceptions that may be needed in addition to the principle
  3. Assistance from foreign governments
  4. The entities to which the disclosure requirements would apply.
The Board discussed that a principle should be used to describe the scope of the disclosures that would focus on arrangements that (1) are the result of an agreement and (2) the entity does not provide equal value in return for the assistance received. The Board directed the staff to perform additional research to refine the elements of the proposed principle such as an agreement and value. The Board directed the staff to perform additional research to refine the elements of the proposed principle such as an agreement and value.

The Board also decided that the disclosures would be required only by business entities and would include information about assistance from both domestic and foreign governments.

*Next Steps

The staff will perform additional research and outreach on a principle that will be used to describe the scope of the disclosures. The staff plans to continue discussions regarding the scope of the project with the Board at a future meeting.

*Board/Other Public Meeting Dates

The Board meeting minutes are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.

The following are links to the minutes for each meeting.

*October 8, 2014 Board Meeting—The Board began initial discussions on the scope of this project.
January 29, 2014 Board Meeting—Agenda prioritization meeting about whether to add a project to the Board’s agenda on the accounting for government assistance.
January 15, 2014 Education Session—Additional research, outreach, and Discussion about whether to add a project to the Board’s agenda on the accounting for government assistance.
November 28, 2012 Education Session—Preliminary research and findings on the accounting for government assistance

Background Information

 A statement in the July 13, 2012 SEC staff report, Work Plan for the Consideration of Incorporating International Financial Reporting Standards into the Financial Reporting System for U.S. Issuers, comparing U.S. GAAP to IFRS pointed out that U.S. GAAP contains areas, such as government grants, for which guidance is in need of continued development. Currently there is no explicit U.S. GAAP accounting standard for the accounting for government assistance. FASB Accounting Standards Codification® Topic 958, Not-for-Profit Entities, provides guidance for contributions received and applies to all entities that receive contributions. However, this guidance excludes tax exemptions, tax incentives, tax abatements, and the transfer of assets from governments to business entities from the scope.

Due to the lack of explicit U.S. GAAP guidance, a research project was initiated to determine whether to add a project to the Board’s agenda on the accounting for government assistance. The scope and accounting considerations of a potential project on the accounting for government assistance would consider the types of government assistance that are pervasive and material to reporting entities, the complexities and terms of government assistance programs and any diversity in practice that currently exists. Certain types of government assistance programs that may be considered in a potential project include grants related to assets or capital projects, payments for expenditures, low-interest and interest-free loans, loan guarantees, bond guarantees, revenue subsidies, certain insurance payments and tax assistance including tax credits, payments in lieu of tax credits, tax exclusions or exemptions, property tax abatements and other tax benefits.

At its January 29, 2014 meeting, the Board voted to add to its technical agenda Government Assistance Disclosures, a project to develop disclosure requirements about government assistance.

*Contact Information

Elizabeth Gagnon
Project Manager
eagagnon@fasb.org

Bradley Deiso
Postgraduate Technical Assistant
bjdeiso@fasb.org