FASB on Wednesday issued Accounting Standards Update (ASU) 2009-06 to provide additional implementation guidance on accounting for uncertainty in income taxes and to eliminate the disclosures required by FASB Accounting Standards Codification (ASC) Paragraphs 740-10-50-15(a) through (b) for nonpublic entities, including pass-through and not-for-profit entities.
The new guidance involves requirements under what was previously known as FASB Interpretation no. 48 (FIN 48), which was first effective for fiscal years beginning after Dec. 15, 2006.
Following recommendations by the Private Company Financial Reporting Committee (PCFRC) and others, FASB deferred FIN 48’s effective date for nonpublic entities until annual financial statements for periods beginning after Dec. 15, 2008—effectively beginning in 2009. The PCFRC is a committee that was formed by the AICPA and FASB to increase private company constituent input in the standard-setting process.
The PCFRC also recommended that FASB exempt private companies from FIN 48. After interviewing stakeholders, FASB declined to exempt private companies and not-for-profit entities from FIN 48 in its entirety. However FASB decided to modify the disclosure requirements for nonpublic entities and provide further guidance for pass-through and not-for-profit entities.
ASU 2009-06 modifies ASC Topic 740 (previously FIN 48) to provide the needed guidance and eliminate certain disclosures for nonpublic entities relating to unrecognized tax benefits.
The ASU is a new type of FASB release. Effective July 1, 2009, all changes to the codification are communicated through ASUs. ASUs will also be issued for amendments to the SEC content in the codification as well as for editorial changes.