FASB Launches Investor Task Force (ITF)

The Financial Accounting Standards Board (FASB) last week announced the launch of its Investor Task Force (ITF), an advisory Resource that will provide the Board with sector specific insight and expertise from the professional investment community on relevant accounting issues. The first ITF research session will probably be held this month.

The ITF represents the latest in a series of steps designed to enhance participation of investors and other users of financial information in the standard setting process. Individual and institutional investors are represented on the User Advisory Council (UAC), Financial Accounting Standards Board Advisory Council (FASAC), FASB’s Emerging Issues Task Force (EITF) and the FASB’s project resource groups.

“We are delighted with the formation of the ITF, which will provide us with valuable sector specific insight from the professional investment community,” Bob Herz, Chairman of the FASB said in announcing the ITF launch. “We thank the ITF member firms for their commitment to this important initiative and encourage other institutions to participate in our due process.”

ITF member firms include: The Capital Group Companies, Fidelity Investments, Mellon Financial Corporation, Putnam Investments, T. Rowe Price and Wellington Management. Together, these financial institutions and their affiliates maintain more the $3 trillion in assets under management. Each member will provide an institutional contact point, typically the Director of Research, who will identify industry specific analysts at their respective firms matching the sector requirements of each standard setting initiative.

In addition to the launch of the ITF, the FASB issued a revised Exposure Draft making targeted improvements to the reporting of earnings per share.

“We believe the proposal issued today [September 30, 2005] will improve the reporting of earnings per share in several important ways, as it simplifies the existing guidance and produces similar earnings per share results for economically similar situations. Moreover, the proposal will enhance the comparability of financial reporting internationally by eliminating differences between Statement 128 and comparable International Financial reporting Standards,” said G. Michael Crooch, FASB Board member in a statement introducing the new exposure draft. “We encourage and look forward to receiving feedback from our constituents on this important initiative.”

The proposed Statement clarifies earnings per share computations involving certain instruments, such as mandatorily convertible instruments and contractual obligations that may be settled with cash or by issuing shares. The Exposure Draft is a revision of the December 2003 proposed Statement, Earnings Per Share and would be effective for interim and annual periods ending after June 15, 2006. A copy of the Exposure Draft is available from the FASB web site.

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